A new Childcare Scheme will be introduced to support working families with their childcare costs and will replace the current salary sacrifice scheme. Unlike its predecessor, the new scheme will be available to the self-employed and those on a minimum wage. Also parents will be able to choose their own voucher provider, as the new system will not be administered by employers.
Claimants will fund 80% of their childcare costs up to £6,000 per child. The remaining 20% (up to £1,200) will be subsidised by Government. From the first year of operation all children under 5 will be eligible and the scheme will build over time to include children under 12.
The scheme will provide support for families where:
· both parents are in work and not receiving support through the Childcare Element of Working Tax Credits/Universal Credit, and
· where neither parent has an income over £150,000.
The scheme has been widely criticised in the press as it seems to discriminate against parents who elect to stay at home to take care of their children.
Support will be provided through a childcare account redeemable at any registered childcare provider. The new scheme will be phased in from autumn 2015 as the current system of Employer Supported Childcare is phased out. The Government will shortly consult on the detail of delivery.