New childcare tax break to be announced by the Government today - what do you think?

"families could be entitled to claim up to £2,000 per child every year from their tax bills"

Does this mean I will get £2000 back per child? Or does it mean I will get the tax on £2000 back per child?

I think we are at real risk of encouring the cash in hand nanny (black) market with all that is being done to NOT support working families. You have to make an awful lot of money to be able to afford UK taxes and still eat.

I want all of my childcare costs (some £2000 per month) to be taken out of my income before I am taxed, and I don't want my pension contribution to be affected as they are with the current voucher scheme. If this was implemented, we would find a lot more nannies being paid on the books.

Anything that finally gives self employed a break has to be good news. No maternity pay, no childcare vouchers... it's really hard. So being able to put some childcare against tax is long overdue.

I don't think this will affect my family as we don't currently use the voucher scheme. I am fortunate that mine and DP's employer offer salary sacrifice (with no limit) for nursery fees (there is a day nursery on site at the uni)
DP sacrifices around 11k of his salary to cover the annual fees and we save around £2700 (not sure of exact figures). In addition we receive a slightly discounted 'rate at the nursery for being staff.
I would hope the proposed changes will help more people than it will negatively impact, but based on recent evidence, I fear it won't

And my question also is I will have £1000 worth saved, ready to put DC3 in playgroup in 2 years - what will happen to these

Another impact will be to pull more people into the bracket where they lose child benefit as Vouchers are generally provided via salary sacrifice and thus gross salaries will rise if scrapped

also agree that impact on parents where kids are over 5 is considerable if no subsidy etc for wrap around care/ afterschool/holiday clubs - perhaps they dont realise not everyone has a job which stops all summer and has 4 weeks off at christmas!

You dont lose the accumulated vouchers if you give up work.

TwelveLeggedWalk: I'm not entirely sure whether higher rate tax payers save 40%, since they don't pay 40% on their entire salaries. I could look at DH's salary but I'm not sure how it's all calculated. Perhaps someone else will know.

In theory, though, if you claim back 40% on £124/month, you would be saving 1240.412 = £595/year.

I'm all for self-employed people and folks whose employers "won't do" vouchers making a saving too, as the current system is unfair on them. But any new system would have to be fair on everyone - all tax brackets, low and high earners, self-employed and parents of pre- and school-aged children. And, like I said before, just letting us claim back tax paid on childcare would cover all these bases!!

'It's a smokescreen to take the attention off the changes to child benefit, which, lets face it,is only a matter if time till they lower and lower the salary threshold until it becomes means tested [cynical emoticon]'

^ This

And thank you Annie for breaking down the tax relief benefit of the pointless voucher scheme. I was getting a bit confused otherwise reading some posts on here.

What do you save as a higher rate tax payer eligible for just £124/month? I'm crap at maths

In two minds here.

As self-employed mother of pre-schooler twins the notion that I could finally start claiming some tax relief on our frightening childcare costs is tempting, and it would mean that I took on more work, pure and simple. So that makes sense for the economy.

But a lot depends on the detail, I don't agree with an under-5 cut-off, and the 'Mother's' pin money' connotations of some reports on this make me quite ragey.

There's always going to be an issue if you change from a system where the saving is up front - as with vouchers - to one where the saving is postponed as I assume it would be through the tax system? Presumably the tax relief will be given retrospectively as if you gave it in advance and the childcare costs changed a person could end up owing HMRC quite a lot of money........

I suppose it would be good for childcare tax breaks to be made available to those parents who can't currently get vouchers - as only certain employers make those available.

But reducing the benefits for people who currently get the vouchers seems like a bad idea, and would potentially discourage some people from working if it meant their "childcare costs vs. money coming in" equation got worse.

It's not clear from that article who the tax breaks would actually go to, it said "mothers" but that may be an assumption of the journalist rather than the actual policy. I would expect this would need to be available to single working parents of either gender, and to couples where both parents work and who need paid childcare to cover their overlapping work hours. But not sure how they would decide which parent within a couple should be able to claim the relief.

A cut-off at 5 years would also not be ideal, and again significantly worse for people currently getting vouchers (though better than nothing for those who don't get them).

All this will do is push up the cost of childcare and hurt those on lower incomes. Crazy.

Not going to help people on NMW Part Time, is it? As they are below the Tax threshold.

All the voucher schemes etc seem to be aimed at high earners - but people working PT for NMW still need to use Nurseries.

OK, they currently get help with the costs through TC's, but that's going to drop significantly once Universal Credit comes in, as it will be counted in the cap, as an element of UC - so the lowest paid will lose their Child Benefit if they work in order to have help with their childcare.

This government is all about helping those on semi-decent wages, whilst hammering those on very low incomes.

"Well done tories, yet another poorly thought through policy, if a bunch of parents on Mumsnet can see problems already why can't the people who are being paid to run the country?"

^^this

Why isn't Mumsnet running the country? Seriously? We'd rock at it!!

The other problem is that if it is a tax break for the person claiming child benefit, does it assume that they are earning more than their personal allowance in order to earn enough to pay tax to be refundeed?

Under our current situation I only work 5hrs a weeks (and we juggle childcare), were I to say double my hours I would probably just be under the personal allowance levels, but would need childcare for ds. I wouldn't however be eligible for the tax break, however under the existing scheme dh could have claimed childcare vouchers, saving a significant amount. At the very least the person claiming CB should be able to nominate their partner for this tax break.

Also if it is not means tested, what about all those people earning over 50k who have deregistered for CB will they be eligible for this or not.

As ours are all either at school or preschool this would also have a significant impact if we were to put them into holiday club if they have the cut off at age 5, an age where lots oof previously SAHP might have been wanting to go back to work, this will be a disincentive to that group of parents.

Well done tories, yet another poorly thought through policy, if a bunch of parents on Mumsnet can see problems already why can't the people who are being paid to run the country?

"Rules could also be relaxed so that nursery staff can legally be in charge of more children, The Daily Telegraph understands. This could see nurseries expand and bring down bills for parents."
They are really not living in the real world if they think nurseries will bring down their fees.

Does anyone know when the announcement is expected or where the details will be published?

If it is true it will be good news but I suppose it depends on what they take away to pay for it!

Has anyone got a link to the part about there will be a change on claiming for over 5s, or is it just hearsay?

You're right Annie. They clearly don't look at their payslip. It also means people tell me that I am saving nearly £3k a year, erm, no I'm not.