Coming Soon to a job near you: Tax Free Childcare?

[GillW]

Did anyone else notice this article in today's Telegraph ?

Sounds like next weeks' pre budget report is going to make employer supported (not just provided) childcare tax-free - albeit at a not-what it really-costs limit of £50/week.

Shame it's still going to be so reliant on the co-operation of employers though, as I bet a lot of people will still miss out if their employers can't be bothered to do it. There needs to be a tax break for the employers too to give them an incentive to offer it.

Obviously all the details haven't been released yet, but the original consultation document is here , and a summary of the responses here .

If this is true, we'll certainly be lobbying DH's employers to take it up (mine does Childcare Vouchers anyway, but (surprise, surprise) our childcare costs more than £50/week).

[marialuisa]

Interesting. DD goes to a school nursery which also has before and after care, according to employers we don't qualify as private schools aren't registered childcare providers. Anyone know if this is true? Seems a bit odd as school is registered for early years grants etc..

[CountessDracula]

Why does this exclude nannies which are generally more expensive than childminders? Very unfair IMO.

[Crunchie]

All I want to know is why can't the government provide tax breaks on ALL childcare? We have a nanny because is works out cheaper than two children full time at nursery. We pay her wages and her tax and NI as her employer, however that is out of our TAXED income. Effectively we pay Income Tax twice. I can only assume that the government feel that anyone with a nanny must be far too rich to need tax breaks! All it means to us is that my dh takes home £50 per week after paying the nanny! He would get about double that is he didn't have to pay the tax twice. I know it isn't worth him working but that is a different argument.

[outofpractice]

This is an issue that drives me mad - lack of tax relief on childcare. I even sent a submission to an Inland Revenue consultation exercise a few years ago, and had a polite letter from the Paymaster General. I am very cynical though about whether anything this government does for working mothers is ever anything more than just talking, or boasting about something of very little practical use. In France you actually get a bigger tax break the more children you have, I am told.

[Pimpernel]

Thanks for that, GillW - interesting. I'm still trying to persuade my employer to offer childcare vouchers though, so I don't hold out much hope for any other schemes.

[GillW]

It does sound as if this is going to be per parent, not per child. But if that's true is it really going to encourage more parents to work? Surely all it is going to do is shift the point at which it becomes uneconomic to work from one child to two, when the full cost of childcare for the 2nd one is not going to be eligible for any tax relief?

I guess we'll have to wait for the details, but at the moment it's also not clear how this is going to tie in with the childcare element of the child tax credit, for those who get it. It could be that for a lot of people they'll be giving on the one hand in the form of a tax break, but taking on the other by employer supported childcare not being counted as expenditure on childcare for the purposes of the tax credits.

I can't help wondering if this is really something of a smoke and mirrors exercise, designed to grab headlines about being family friendly, but actually framed in such a way that they know very few people will actually end up benefiting from it.

[GillW]

Marialuisa - I'd check with the nursery itself about whether the nursery and the before/after care qualifies, even if the school itself doesn't.

The vouchers I get specifically say that they CAN be used for (amongst other things) "Registered Private Nursery Schools" and "Out of School Schemes" although "school fees" are specifically excluded.

It is possible that your nursery fees could be covered, and your before/after care almost certainly is if they are registered (which I believe they have to be).

The nursery probably know the situation better than your employers do - they may just be hearing the word "school" and thinking "no" without knowing the full picture.

[Marina]

Thanks a lot for this GillW. Funnily enough, we might well benefit , as we earn jointly about £50 per annum over the cut-off point for Child Tax Credits - why is your annual income not assessed on the basis of what you actually earn while on mat leave, I wonder?
Could not agree more with others here that all forms of paid-for childcare should qualify for full tax relief. I was asked to comment for our local paper about a Daycare Trust report that identified my local borough as having one of the poorest provisions nationwide of affordable childcare. I made sure I said that the best measures to help all parents were a full year's parental leave on full pay per family (so that, for example, mum could do the first six months and dad the second, if a couple wanted to split the provision) - this is how the system works in Sweden I think - and full tax relief on paid-for childcare.

[marialuisa]

Will have a word at school. Could be a bit tricky as it is the fees that are the main cost. Before care is free and after care about#1 per half hour!Nevertheless, as she's only in nursery and not reception?? live in hope. Made the mistake of ringing the tax credit people to see if paying childcare would make any difference to our generous tax credit (about 20 quid a month at the mo) and they just about managed not to laugh down the phone!