Tuesday, April 12, 2011

Childcare costs for working parents – Government to bring in new changes

Source: http://www.touchstoneblog.org.uk/2011/02/does-the-government-care-about-childcare-costs-for-working-parents/
This April working parents across the country will get a shock – despite inflation running at 4.8 per cent the childcare costs they receive under Working Tax Credit will be cut by 10 per cent. And there is no indication that things are going to get better.

It remains unclear how childcare costs will be met under Universal Credit, with early indications that support may be even less than is available at present, and several recent Government consultations on new mandatory welfare to work programmes have been unable to commit to providing childcare for parents who are required by Jobcentre Plus to take part.

It’s too early to call for sure but indications are that the Government’s position is becoming increasingly conservative: if work doesn’t pay you enough to cover your childcare costs then it’s time to get back into the kitchen (unless of course you’re a lone parent).

The childcare element of Tax Credits was introduced in April 2003, meeting up to 70 per cent childcare costs (up to a maximum of £300 a week for two or more children) for eligible working families (those with household incomes low enough to entitle them to tax credits and where both parents/a single parent are are working 16 hours or more each). In March 2006 eligible costs were increased to 80 per cent, meaning that the maximum amount payable per week effectively moved from £210 (70 per cent of £300) to £240. However, only families on the lowest incomes and with the highest childcare costs will have recieved the full amount – for every £1 a household earns they lose, under present rules, 39p of their Tax Credit award.

To read the full article, please click here.

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