Budget 2013: childcare costs

Child at nurseryWill Hadwen, rights adviser to the charity Working Families, on what George Osborne's 2013 Budget contained for families.

Childcare costs

We already knew about the changes to childcare support - the new Tax-free Childcare Scheme was announced before the budget. Although this scheme has some welcome points, there are winners and losers. While this is good news in particular for larger families, as the payment is set at £1,200 per child per year, both parents in a couple will have to work to be eligible - so if one parent is made redundant, it looks as if the right to Tax-free Childcare may be lost. And it's yet to be confirmed that families in which one parent is studying or training will be eligible.

Tax-free Childcare - which will be a national scheme, covering England, Wales, Scotland and Northern Ireland - won't be means-tested, but if you are on a low income and claiming tax credits or Universal Credit, you won't be covered by the scheme.

Within Universal Credit (which starts to roll out nationally for new claimants in October 2013), parents who both earn enough to pay income tax (over £10,000pa) will get 85% help with childcare costs, up to set limits. Other claimants will get 70% up to the set limits, the same as for existing tax credit claimants. But both these benefits are means tested, so in practice these are the maximum amounts you can get rather than the actual help.

We hope that parents will be able to choose whether to claim Tax Credits/Universal Credit or to use the Tax-free Childcare scheme in circumstances where they might be better off that way. We already know that existing users of Childcare Voucher schemes will be able to stay in them if they want to, or switch to the new scheme if they prefer. The government has said it will make all the options clear, so let's hope that this happens before any parent has to make difficult decisions.

Free childcare places

Some reassurance: the existing offer of 15 hours of free childcare for three year olds is staying. And in fact the government had already said they would extend this to 15 hours for all three  and four year olds, and by 2014/15, for 40% of two year olds as well.

Child Trust Funds

Remember them? They are no longer available, but many of you will have children who have Child Trust Fund accounts.

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Hidden away in the 2013 Budget is a statement that the government will consult on options for transferring savings in Child Trust Funds into Junior ISAs. That's to be in a Finance Bill in 2014, though, so don't expect it to be possible for a while yet.

Anything else?

Apart from that, it's difficult to see that there was much in the Budget specifically for parents. There is going to be more help for people to buy their own homes, for example where they can't afford a big deposit.

We already knew about the flat-rate pension being brought forward to 2016 - again, swings and roundabouts there, as some people will pay more National Insurance as a result. And we already knew about the cap of £72,000 protecting people's savings if they have to pay for care.

The cut of £2,000 from employers' National Insurance bills might be helpful - it's possible, for example, that it could encourage employers to take on more part-timers - and of course this could help you if you run a small business yourself. 



Last updated: about 3 years ago