Childcare benefits

In order to assist parents of young children to stay in the jobs market, the government has established a scheme which enables the parents to buy childcare vouchers which benefit from tax relief in the form of ‘salary sacrifice’. However, this scheme is not available to the self-employed and provides only up to 15 hours’ […]

Divorce gets complicated

Perhaps surprisingly, divorce rates are falling. According to the Office for National Statistics, there were 101,055 divorces in the UK in 2015, representing a 9% reduction on the previous year. However, the average age at which people are getting divorced is at an all-time high. The average age for men is now over 45 and […]

Funding spouses’ pensions

MPAA aside, reductions in both the annual pension contribution allowance and the lifetime allowance have curtailed the use of pensions as a savings medium. However, there may be an opportunity to pay contributions to the scheme of a spouse or civil partner or cohabitee. The person benefiting from the third-party contribution will receive tax relief […]

Some tax changes deferred

The government’s precarious majority is preventing it from pursuing some of the more controversial tax changes which had been proposed in this year’s Budget. Among the proposals in the 2017 Finance Bill which have been postponed are the reduction in the annual tax-free allowance for dividends from £5,000 to £2,000 and the requirement for businesses […]

Inheritance tax receipts rise

Exceptionally high levels of stamp duty are reported to be discouraging house sales and in particular discouraging older people from down-sizing. Stamp duty on the sale of a £2 million home will amount to £143,000 and on a £600,000 home to £20,000. The government is also benefiting from increased receipts from inheritance tax which result […]

The UK population increases

The Office for National Statistics revealed recently that the UK population is rising at its fastest rate for more than 70 years. At the end of June 2016 the population stood at 65.6 million people, which represented an increase of half a million over the previous twelve months – an increase which Brexit voters might […]

This website uses cookies to ensure you get the best experience on our website. View our cookie policy here

Childcare benefits

In order to assist parents of young children to stay in the jobs market, the government has established a scheme which enables the parents to buy childcare vouchers which benefit from tax relief in the form of ‘salary sacrifice’. However, this scheme is not available to the self-employed and provides only up to 15 hours’ childcare or education per year.

From September, the 15 hour limit is to be increased to 30 hours, but this will be subject to the parents meeting income criteria: both parents must earn at least £120 per week and less than £100,000 annually; and HMRC requires confirmation of eligibility every three months. It should also be noted that not all childcare providers have signed-up to the scheme.

Two additional schemes are now being introduced which offer other options. In May 2017 a tax-free Childcare Account became available, which is basically an on-line savings account to which the government contributes, and which is used to pay for approved childcare. For every £8 paid by the parent, the government pays an additional £2, up to a maximum of £2,000 p.a. per child.

The second scheme, which will follow in September, enables parents of three and four-year old children to apply for 30 hours of free childcare or education worth about £5,000 per year per child.

Both these schemes can be accessed at the same time and are available through HMRC’s Childcare Choices site https://www.gov.uk/search?q=childcare+choices and a helpline is available on 0300 123 4097. However, reservations have been expressed about the complexity of the process for claiming benefits.