New tax-free childcare scheme to be introduced early 2017
The new tax-free childcare scheme was meant to start in Autumn 2015, this was delayed and will now start in early 2017. The new tax-free childcare scheme will leave many parents deciding whether to move to the new scheme or stay with their existing scheme. At first, parent’s youngest child will enter the scheme first and by the end of 207 it will be open to all.
Childcare voucher schemes will close to new employees from April 2018 so parents will need to decide whether to join their company’s scheme by then or join the new tax-free childcare scheme.
The TFC scheme will operate through online accounts and for every 80 pence paid in, the Government will add 20 pence up to a maximum of £500 (£1,000 for disabled children) per child for each three month entitlement period.
LITRG Chairman, Anthony Thomas, said:
“Since the scheme was first announced, LITRG have raised many concerns about the interaction between TFC and other childcare schemes. People will face extremely complex and difficult financial decisions about whether to join the new TFC scheme or stay in existing schemes including childcare vouchers, tax credits and universal credit.
“It is crucial that the Government ensure that detailed guidance is published over the next few months ahead of the commencement of the scheme and that potential users are given support to help them make the right choice. For the most complex situations, a telephone advice line should be provided with trained advisers who can guide people through the interactions. Funding should also be made available for the voluntary sector to support people with these difficult choices.”