Tax Free Childcare will the new rules be better or worse?

The Government wants to help working families and currently if you are an employee your employer can help with childcare and could for example buy childcare vouchers of up to £55 per week, the vouchers would be a tax free benefit to the employee. However, if you’re self employed you aren’t an employee so the rules don’t apply.

So recently there has been a consultation on what should be be done in the future.

The key proposals are:

• New Scheme to go live in Autumn 2015
• Working Families will open Voucher Accounts (self employed or employed)
• As parents pay in the government tops up the account with 20p for every 80p paid in
• Top up capped at £1,200
• To be eligible all parent must work and not receive tax credits or be an additional rate tax payer

The chart below shows how it should work:

 

steve@bicknells.net