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Works in a similar fashion to the Basic Rate Tax Relief mechanism for personal pensions or Gift Aid: pay in £0.80 for every £1 and the government will contribute £0.20 to the pot.
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Unlike with personal pensions or Gift Aid, there appears to be no Higher Rate relief to claim through Self Assessment.
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For each child, the maximum government contribution is £2,000 – meaning that parents will have to pay in £8,000 per child to maximise the contribution. This is an increase of £800 per child on the original announcement.
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In a further improvement to the original scheme, implementation will be accelerated as it will be rolled out to under-12s within the first year, starting in Autumn next year.
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Applies to registered / approved childcare provision, including nurseries, childminders, nannies and school-based care.
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Available only where both parents work, or where the sole parent works – no relief where a parent stays at home.
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Available to self-employed as well as employed parents providing earnings exceed £50 per week – there is a “start-up period” for self-employed where the minimum income limit will not apply.
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Those with incomes exceeding £150,000 will be ineligible.
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The current Employer-Supported Childcare Schemes (ESC) will continue but will be closed to new members from August 2015. Those remaining in ESC may transfer to the new Scheme but will have to leave ESC.
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Those wanting to take advantage of the new Scheme will have to open an online account with NS&I, pay into the account and the government will contribute on a quarterly basis.
About The Author
Lee is TaxationWeb's Articles & News Editor and writes for TaxationWeb. He is a Chartered Tax Adviser with experience of advising individuals and owner-managed businesses over a broad spectrum of tax matters.
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