Parents to be able to claim back some childcare costs
PARENTS earning less than £150,000 a year each could be able to claim back up to £1,200 childcare costs per child under new Government plans.
The plans, which could come in to force in 2015, would mean working parents being able to recoup around 20 per cent of childcare costs.
Children up to five years old will be covered initially, but the Government has said it will build up over time to include all children under 12.
Labour has said parents will be disappointed not to get help sooner.
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Britain is said to have some of the highest childcare costs in the world.
Prime Minister David Cameron is reported as saying the plans, expected to cost £1.4bn, would be a "boost direct to the pockets of hard-working families".
The government says it expects the new tax-free childcare scheme to eventually help 2.5 million working families.
Parents can already get help with childcare costs - through the childcare voucher scheme - but this is provided by only around five per cent of employers.
To be eligible for the new support both parents will have to work - or the one parent in the case of lone parent families - and each parent must be earning less than £150,000 a year.
In two-parent families where one parent does not work, families will not receive support.
Half of the funding for the new scheme will come from the abolition of the previous system of childcare vouchers, and in part by funding switched from elsewhere in Whitehall.
Mr Cameron is reported as saying: "This is a boost direct to the pockets of hard-working families in what will be one of the biggest measures ever introduced to help parents with childcare costs."
Under the current employer supported childcare voucher scheme, parents can receive vouchers for childcare worth up to £55 a week. This sum is deducted from their salary before tax is paid.
The saving in tax and national insurance is typically worth about £900 a year for a basic-rate taxpayer.
Where both parents work, families can save about £1,800 a year.
These vouchers are available only to employees whose employer is part of the scheme, but the new policy is expected to be open to all working parents who meet the criteria.
The government has already announced changes to allow nurseries and childminders in England to look after more children, which it says will make more childcare places available and reduce costs.
Labour's shadow education secretary Stephen Twigg is reported as saying: "Parents will be disappointed that three years into this government they will not get any help with childcare costs for another two and a half years.
"While working parents won't get any help before the next election, David Cameron is happy to help millionaires with a tax cut now."
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