commonslibrary.parliament.uk

By David Foster, Niamh Foley, Sue Hubble, Steven Kennedy, Antony Seely

13 August 2021

Childcare: support with costs (England)

Summary 1 Use, cost and affordability of formal childcare 2 Free 15 and 30 hours of childcare for younger children 3 Subsidies towards the cost of childcare for those in

employment 4 Support through the benefits and tax credits systems 5 Support for students 6 Annex

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Number 8054

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Contents

1 Use, cost and affordability of formal childcare 6

Department for Education childcare survey of parents 6

Coram childcare survey 2021 6

2 The childcare entitlements (15 and 30 hours of free childcare) 8

2.1 Two-year-olds 8

2.2 Three and four-year-olds 8

15 hours (over 38 weeks) of free childcare for all (universal provision) 8

Additional 15 hours of free childcare (“extended entitlement”) 9

2.3 Frequently asked questions 10

Can a childcare provider charge for lunch and nappies? 10

When does my child become eligible for the free hours? 10

What happens if my work has been impacted by the pandemic? 10

2.4 Further sources of information 11

3 Subsidies towards the cost of childcare for those in employment 12

3.1 Tax Free Childcare 12

Coronavirus pandemic 12

3.2 Childcare vouchers 13

3.3 Further sources of information 13

4 Support through the benefits and tax credits systems 14

4.1 Tax credits 14

4.2 Universal Credit 15

Help with upfront childcare costs 16

5 Support for students 19

5.1 Higher Education 19

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5.2 Further education 20

6 Annex 21

6.1 Previous schemes on tax relief for childcare 21

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Summary

This briefing paper provides a brief overview of the financial support available to parents and carers in England to help with the costs of formal childcare. Information on Government funding for childcare providers is available in a separate briefing: CBP 8052, Early years funding (England).

The first section provides brief background information on the use, cost and affordability of childcare in England. The remaining sections provide an outline of the sources of financial support for parents and carers, namely:

• The early education entitlements (15 and 30 hours of free childcare) for younger children

• Childcare vouchers (Employer Supported Childcare) • Tax-Free Childcare • Working Tax Credit childcare element • Universal Credit childcare costs element • Help with upfront childcare costs under Universal Credit • Support for undergraduate (and some postgraduate) students • Links to more detailed Library briefing papers are contained within this

paper

The briefing applies to England only.

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1 Use, cost and affordability of formal childcare

This section provides context for the remainder of the briefing by giving very brief information on the use, cost and affordability of formal childcare in England, based on two annual survey reports.

Department for Education childcare survey of parents The Department for Education’s most recently published childcare and early years survey of parents suggests that formal childcare was used by just under two-thirds (64%) of children aged 0-4 in England in 2019. Use of formal childcare increased with age, being used by 11% of 0-year-olds but 93% of four-year-olds.

59% of families who used a childcare provider in the reference week reported paying for the childcare. 42% of surveyed parents rated the affordability of local childcare as very or fairly good, with 36% rating it as very or fairly poor. 46% of parents who paid for childcare said it was easy or very easy to meet the cost; 27% found it difficult or very difficult. Lone parents were the most likely to experience difficulty in meeting childcare costs.

Regarding support with the costs of childcare, the survey’s findings included:

• 40% of parents with a child aged 0 to 4 were aware of the Tax-Free Childcare scheme. 13% of working families with a child aged 0-4 had opened a Tax-Free Childcare account.

• Among families who used formal childcare, 27% reported that they received financial assistance from at least one external source.1

Publication of the DfE’s survey of parents for 2020 was cancelled as a result of the Covid-19 pandemic.2

Coram childcare survey 2021 In March 2021, Coram published its Childcare Survey 2021, which was based on survey responses gathered in November and December 2020.

Coram reported that the survey showed the early impacts of the Covid-19 pandemic, with childcare usage considerably lower since March 2020 than in

1 Department for Education, Childcare and early years survey of parents: 2019, 19 December 2019. 2 Department for Education, Childcare and early years survey of parents: 2020, last updated 13

November 2020.

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usual times. It added that childcare prices had risen above inflation, “perhaps driven by childcare providers trying to adapt their business models to stay viable during this challenging time.”3 In England, the report stated that the average price of 25 hours of nursery had risen by 4.4% for children under 2 since 2020. The equivalent increases for children aged 2 and 3-4 year olds using the free childcare entitlement were 4.6% and 3.1% respectively.4

The report detailed the average price of childcare in a variety of settings for children of different ages, noting that most parents receive some support through Tax-Free Childcare or the benefits system to help them pay these costs. For example, it showed that the average price of a part time (25 hours) childcare place in a nursery in England for a child under 2 was £140.27 a week. The cost of an equivalent full-time place (50 hours) was £268.06. The price of a part-time place in a nursery for three and four-year-olds was much less (£52.44), in part as a result of the universal entitlement to 15 hours of free childcare for this age group (see following section).

The survey’s other findings on the cost of childcare included:

• Overall, nursery prices are higher than childminder places. • Nursery prices for children under two are more expensive than for two-

year-olds, due to lower staffing costs as a result of increased staffing ratios.

• The price of childcare varies considerably by region. For example, the average price of 25 hours of nursery childcare for a child under two is 56% higher in inner London than in Yorkshire and Humberside.

• In 99% of local areas, the average price of a full time nursery place for a child under two is higher than the maximum costs supported through universal credit and the benefits system.5

3 Coram, Childcare Survey 2021, March 2021, p4. 4 Coram, Childcare Survey 2021, March 2021, p18. 5 As above, pp11-18.

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2 The childcare entitlements (15 and 30 hours of free childcare)

2.1 Two-year-olds

Some disadvantaged two-year-olds are eligible for the 15 hours of free childcare (see below). This includes if they:

• live in a household that receives specified welfare benefits • is in receipt of Disability Living Allowance • is or, in some circumstances, was a “looked after child”. 6 • Have an Education, Health and Care (EHC) Plan

Further information is set out on the GOV.UK webpage, Free education and childcare for 2-year-olds.

2.2 Three and four-year-olds

15 hours (over 38 weeks) of free childcare for all (universal provision) All three and four-year-olds in England are eligible for what is commonly called “15 hours of free childcare”, irrespective of their financial means.

The actual statutory entitlement is for 570 hours per annum, which is often taken as 15 hours for 38 weeks of the year. However, the entitlement can be stretched over more than 38 weeks, subject to agreement with their childcare provider.

The entitlement must be used with an approved childcare provider and stops when the child starts in reception class or reaches compulsory school age (whichever is later).

Further information is available on Gov.uk at: 15 hours free childcare for 3 and 4-year-olds.

6 A looked after child is a child who is either in the care of a local authority further to a care order made by the court, or who is being provided with accommodation by a local authority (for a continuous period of more than 24 hours) e.g. following voluntary agreement with the child’s parent(s).

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Additional 15 hours of free childcare (“extended entitlement”) Some three and four-year-olds qualify for a further 570 hours of funded childcare on top of the “15 hours of free childcare”. This, together with the universal entitlement is commonly taken as 30 hours over 38 weeks of the year (and is often referred to as “30 hours of free childcare” or the “extended entitlement”.)

Again, the statutory provision of 570 hours can be stretched over more than 38 weeks (but it cannot be condensed into a period shorter than 38 weeks) subject to agreement with their childcare provider.

Usually, to be eligible for the extended entitlement a single parent, or both parents in a two-parent household, must expect to earn at least the National Minimum Wage or Living Wage for 16 hours a week on average over the next three months. If a person (and/or their partner) have an expected ‘adjusted net income’ of over £100,000 a year, they are not eligible for the extended entitlement.7

Certain households may still be eligible for the extended entitlement even if they do not meet the income criteria set out above. This includes (but is not limited to):

• Where one (in a couple household) or both parents are in receipt of benefits in connection with sickness or parenting (e.g. on sick or annual leave, or on parental, maternity, paternity or adoption leave). Where this only applies to one parent, the other parent has to meet the income means-test set out above.

• Where one parent (in a couple household) is in receipt or could be entitled to be in receipt of,

– Incapacity Benefit – Severe Disablement Allowance – Carer’s Allowance or – contributory Employment and Support Allowance, and their

partner meets the income means-test.

In terms of nationality criteria, the Government notes that:

To be eligible for 30 hours free childcare, you (or your partner if you have one) must have a National Insurance number and at least one of the following:

• British or Irish citizenship

7 “Adjusted net income” is gross income less certain pension contributions and other factors. For more information, see the GOV.UK webpage Personal Allowances: adjusted net income.

Some parents may still be eligible if their working hours have been impacted by the coronavirus pandemic. More information is in section 1.3.

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• settled or pre-settled status, or been living in the UK before 1 January 2021 with the right to reside

• permission to access public funds - your UK residence card will tell you if you cannot do this. 8

Further information is available on Gov.uk at: 30 hours free childcare.

2.3 Frequently asked questions

Can a childcare provider charge for lunch and nappies? Yes. Childcare providers are allowed to charge for lunch, nappies and other consumables, as well as for trips. 9

When does my child become eligible for the free hours? A child becomes eligible for either the 15 or 30 hours entitlements at the start of the term following their third birthday (or second birthday for those children eligible for the free 15 hours for two-year-olds). The table below gives more information.

What happens if my work has been impacted by the pandemic? Due to the pandemic, working patterns and income may have temporarily changed. Parents could still be eligible for the 30 hours of free childcare if they would normally meet the thresholds and are furloughed through the Coronavirus Job Retention Scheme, or claiming through the Self Employment Income Support Scheme.10 More information is available on the GOV.UK

8 GOV.UK, 30 hours free childcare, webpage accessed on 9 June 2021 9 Department for Education, Early years entitlements: operational guidance – For local authorities and

providers, June 2018, p33 10 GOV.UK, 30 hours free childcare, webpage accessed on 21 June 2021

Notes: Parents and carers would be advised to check with their childcare provider to find out the exact date their 30 hours free childcare starts Source: Gov.uk, 30 hours free childcare [accessed 9 June 2021]

Applying for 30 hours free childcarePeriod in which your child turns three

Free 30 hours childcare from term commencing:

Recommended time to apply

1 Sept to 31 Dec On/ after 1 Jan 15 Oct to 30 Nov

1 Jan to 31 Mar On/ after 1 Apr 15 Jan to 28 Feb

1 Apr to 31 Aug On/ after 1 Sept 15 Jun to 31 Jul

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webpage 30 hours free childcare or in the Commons briefing, Coronavirus: Childcare FAQs (CBP8872) .

2.4 Further sources of information

The following provide further information the 15 and 30 hours entitlement:

• HM Government, Help Paying For Your Childcare (Childcare Choices website)

• Department for Education, Early years entitlements: operational guidance – For local authorities and providers, June 2018

• Department for Education, Early education and childcare – Statutory guidance for local authorities, June 2018

• NRPF Network, Early education and childcare

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3 Subsidies towards the cost of childcare for those in employment

3.1 Tax Free Childcare

Tax Free Childcare (TFC) is the replacement scheme for childcare vouchers (see section 2.3).

Under the TFC scheme, a parent or carer pays funds for childcare into a TFC account. The Government then tops up each £8 paid in with an extra £2, up to a maximum of £500 per child every three months, or £1,000 every three months for a disabled child (up to £2,000 or £4,000 per annum, respectively). Money in the TFC account can then be used to pay for approved childcare.

TFC can be paid in respect of any child under 12 years of age, or under 17 if they are disabled. A parent/carer can usually only qualify for TFC if they, and their partner if they have one, earn at least the equivalent of 16 hours at the National Minimum Wage or National Living Wage as appropriate (depending on their age) per week. However, if a person or their partner have an ‘adjusted net income’ over £100,000 a year they are not eligible.

The eligibility criteria for TFC are the same as the for the 30 hours of free childcare (see section 1.2 above), and can be paid in respect of any child aged under 12 years of age, or under 17 years of age if they are disabled. A person can get TFC at the same time as 30 hours free childcare if they are eligible for both. However, it is not possible to be in receipt of TFC at the same time as being in receipt of:

• Childcare vouchers • Universal Credit, Working Tax Credit, or Child Tax Credit. • A childcare bursary or grant

Further information is available in Gov.uk at: Tax-Free Childcare.

Coronavirus pandemic Due to the pandemic, working patterns and income may have changed. HMRC have temporarily relaxed the rules, so that parents receiving payments from the Coronavirus Job Retention Scheme or the Self Employment Income Support Scheme may still be eligible for TFC.11

11 GOV.UK, Tax-Free Childcare, webpage accessed on 21 June 2021

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3.2 Childcare vouchers

Parents who receive childcare vouchers from their employer may be entitled to claim tax relief on this benefit, provided they joined their employer’s scheme on or before 4 October 2018.

The Government published detailed plans for Tax Free Childcare (TFC) in March 2014, and at this time confirmed that as part of this reform tax relief for employer-supported childcare (ESC) would be withdrawn for new schemes. Following delays in the roll-out of TFC, in March 2018 the Government confirmed that ESC would be withdrawn for any parents joining an employer scheme after 4 October 2018. 12

A parent cannot continue to claim childcare vouchers if they have made a successful application for Tax-Free childcare.

HM Revenue & Customs publish guidance on the tax relief that existing scheme members may be entitled to claim. 13 Guidance on employer-supported childcare is also published by the Low Incomes Tax Reform Group. 14 More detail can be found in section 5.1, in the Annex of this paper.

3.3 Further sources of information

The following might be of help:

• Childcare Vouchers and Tax-Free Childcare - Frequently Asked Questions, Commons Briefing paper CBP8055, 20 April 2018

• Tax Relief for Childcare, Commons Briefing paper CBP19, 15 May 2018 • GOV.UK, Get Tax-Free Childcare: step by step

12 Employer Supported Childcare: Written statement HCWS616, 29 March 2018 13 Childcare vouchers and other employer schemes, ret’d February 2020; see also, HMRC, Employer

Supported Childcare (Notice 480: Appendix 11), December 2019. 14 LITRG, Employer-supported Childcare, February 2020

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4 Support through the benefits and tax credits systems

Working families can get help with childcare costs via the childcare element of Working Tax Credit and the childcare disregard in Housing Benefit. Tax credits and “legacy” social security benefits, including Housing Benefit, are being replaced by Universal Credit (UC). UC also includes a childcare costs element.

4.1 Tax credits

Tax Credits – Child Tax Credit (CTC) and Working Tax Credit (WTC) – provide means-tested support for people on low to middle incomes. WTC includes a childcare element covering up to 70% of eligible childcare costs up to £175 a week for one child and £300 for two or more children. The maximum support claimants can receive is therefore £122.50 a week for one child and £210 for two or more children.

Families can also benefit from the additional childcare disregard in Housing Benefit. Combined with the WTC childcare element, this means that families who pay rent may get help with up to 89.5% of eligible childcare costs up to the WTC weekly limits.

People can get help with childcare costs if they are:

• a lone parent working least 16 hours a week; • a couple both working at least 16 hours a week; or • a couple where one partner works at least 16 hours a week and the other

is incapacitated, a carer, in hospital or in prison.

The claimant or their partner must be “responsible” for the child and incurring relevant childcare charges. HM Revenue and Customs guidance explains what “relevant childcare” covers in England, in Wales, in Scotland, and in Northern Ireland. 15 The childcare element is only payable for children up to the 1st September following their 15th birthday, or 1st September following their 16th birthday if the child qualifies for the disabled child element of Child Tax Credit.

Families can claim help with childcare costs as soon as they start paying for childcare, or up to seven days before the childcare starts. An online

15 Working Tax Credit: help with the costs of childcare, WTC5, April 2021

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calculator is available on GOV.UK to help claimants work out what childcare costs they can claim for. 16

The WTC childcare element is paid to the claimant, not directly to the childcare provider. In the case of couples, the WTC childcare element is normally paid to the “main carer” of the child or children, as nominated when the tax credits claim was made.

Recipients of the childcare element need to notify HMRC within one month if:

• they stop paying for childcare, or average weekly childcare costs go down by £10 or more;

• their childcare provider ceases to be registered or approved; • they stop using a registered or approved childcare provider; or • they start getting other help towards childcare costs.

Further information on the WTC childcare element can be found in HMRC leaflets 17 and guidance 18, and at the Revenuebenefits website. 19

4.2 Universal Credit

Universal Credit (UC) is means-tested and is payable to individuals and families in or out of work. In Great Britain it is administered by the Department for Work and Pensions (DWP), and in Northern Ireland by the Department for Communities.

UC includes a childcare costs element covering up to 85% of childcare costs, with the maximum amount payable being £646.35 a month for one child, or £1,108.04 a month for two or more children. 20

To be eligible for the childcare costs element, claimants must meet the work condition and the childcare costs condition.

The work condition is that the person is in paid work or has accepted an offer of paid work. There is no minimum working hours requirement. For couples, both partners must normally be in work or have accepted an offer of work. The childcare costs element may however be paid if one partner is working and the other has a “limited capability for work”, is caring for a disabled person, or is temporarily absent from the household (e.g. in hospital, in a care home, or in prison).

16 See Tax credits: working out your childcare costs 17 Working Tax Credit: help with the costs of childcare, WTC5; and Working Tax Credit: childcare

element: for childcare providers, WTC5/CP, April 2021 18 HMRC, Tax Credits Technical Manual, updated 15 April 2021 19 Tax Credits: Understanding childcare, updated 3 November 2020 20 The weekly equivalent amounts are £149.16 and £225.70, respectively.

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The childcare costs condition is that childcare costs are being paid for a child or qualifying young person the claimant is responsible for, up until 1st September following their 16th birthday. The costs must be incurred to allow the claimant to take up or continue paid work.

The childcare costs element can only be paid for “relevant childcare”. This generally means that the childcare provider is registered with OFSTED (in England), the Care Inspectorate (in Scotland), the Care and Social Services Inspectorate for Wales, or the relevant Health and Social Care Trust in Northern Ireland.

UC is calculated with reference to the household’s income and circumstances in each successive monthly “assessment period”. Claimants need to report childcare costs incurred by a deadline, to be reimbursed. Since 16 October 2019, claimants have had until the end of the assessment period following the assessment period in which they paid for childcare to report those childcare charges. 21 Previously, claimants generally had to report charges before the end of the assessment period in which they were paid.

The DWP may not reimburse childcare charges in full if they are deemed excessive given the amount of work the person does, or if the person is getting help with childcare costs from their employer or another source.

Further information on the UC childcare costs element can be found in leaflets, 22 and in more detailed official guidance. 23

Help with upfront childcare costs The UC childcare costs element reimburses claimants for childcare charges already paid. Help with upfront charges demanded by childcare providers may be available from:

• The Flexible Support Fund (FSF) – a discretionary fund, allocated by Jobcentre Plus Work Coaches to help eligible claimants that they support overcome barriers to work. Payments made via the FSF do not have to be paid back by the claimant. 24

• Budgeting Advances – for people who have been claiming UC for at least six months 25 and who can demonstrate low income over that period

21 The change was introduced by The Universal Credit (Childcare costs and Minimum income Floor) (Amendment) Regulations 2019; SI 2019/1249

22 DWP, Universal Credit: childcare guide, updated 2 July 2020 23 DWP UC Guidance Chapter: Childcare costs, Version 20.0; Advice for Decision Making Chapter F7:

Childcare costs element 24 See DWP UC Guidance Chapter: Flexible Support Fund, Version 8.0 25 If the Budgeting Advance is required for the purpose of entering or maintaining employment, the six

month qualifying test is waived

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(below £3,600 for couple, or £2,600 for single parents). Claimants are required to pay them back. 26

Examples of upfront charges that may be met from the Flexible Support include:

• Deposit – To pay a provider a one-off advance payment of childcare costs.

• Retainer – To pay a provider a one-off advance payment to secure the nursery provision prior to the parent starting work or training.

• Fees – To pay a provider upfront childcare fees in advance of the service being delivered; and

• Taster/Settling in periods – To pay a provider a one-off advance payment to enable the parent to prepare their child before taking up the full childcare offer. 27

There is no automatic entitlement to help with upfront childcare charges. The DWP states that each request is “considered carefully on its own merits”. 28

Budgeting Advances are repayable over a period of up to 12 monthly instalments (or up to 18 months in exceptional circumstances). Only one Advance will be paid at a time and further Advances cannot be made until the balance of the previous Budgeting Advance is cleared. 29 Budgeting Advances may be made for further upfront childcare charges faced by eligible UC claimants already working – e.g. for costs incurred during school holidays, due to changes of childcare provider or additional costs when the person’s working hours increase. 30

Legal challenge

On 22 January 2021, the High Court ruled that the DWP’s mechanism for assessing and paying the childcare costs element of Universal Credit, which requires claimants to pay their childcare costs upfront before receiving the childcare costs element (the “Proof of Payment” rule), is unlawful. The judgment said the Proof of Payment rule subjected a lone parent, Nichola Salvato, and others in her situation, to indirect sex discrimination, contrary to Article 14, read with Article 8, and Article 1 of the First Protocol of the European Convention on Human Rights (ECHR). The judge also decided that the Proof of Payment rule was irrational. 31

26 See DWP UC Guidance Chapter: Advances - Budgeting Advance, Version 9.0 27 PQ 282562 [on Universal Credit], 5 September 2019 28 Ibid. 29 PQ 6355 [on Universal Credit], 31 October 2019 30 PQ 282562 [on Universal Credit], 5 September 2019 31 Salvato, R (On the Application Of) v Secretary of State for Work and Pensions [2021] EWHC 102

(Admin); see also Working mum wins claim challenging rule for Universal Credit parents to pay childcare costs upfront, Leigh Day press release, 22 January 2021

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The DWP has confirmed in a written answer that it has been granted permission to appeal against the judgment to the Court of Appeal. 32

32 PQ 153348, 24 February 2021

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5 Support for students

5.1 Higher Education

Students on full time undergraduate courses (and postgraduate students on initial teacher training courses) may be eligible for help with childcare costs in the form of a Childcare Grant - information on the Childcare Grant is available on the Student Finance England (SFE) website at Full-time Childcare Grant. The Childcare Grant helps towards childcare costs for students with dependent children aged under 15 at the beginning of the academic year (or under 17 if the child has special educational needs) who are in registered or approved childcare. The grant is based on household income and does not normally have to be paid back. The amount that students could receive in 2021/22 will be £179.62 a week for one child or £307.95 a week for two or more children.

Students who are parents may also apply for a Parent’s Learning Allowance (PLA) – information on this is available on the SFE website at Full-time Parents' Learning Allowance. The maximum PLA is £1,821 for the 2021/22 academic year.

Healthcare students In addition to the general student support outlined above healthcare students may also be able to access additional funding through the NHS Business Services Authority’s Learning Support Fund - this fund has elements which cover childcare costs, placement costs and hardship funding. 33

Students with child dependants who meet the eligibility criteria can apply for Parental Support (formerly the Child Dependants Allowance) of £2,000 per year for each year of study (pro rata if studying less than full-time). The payment is not related to the number of dependants.

Postgraduate students There is no specific funding to cover childcare costs for most postgraduate students.

33 Department of Health and Social Care, NHS Financial Support for Health Students (Third Edition) Learning Support Fund, 9 July 2019

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Students studying for doctorates are usually funded by research council stipends, institutional awards/scholarships or doctoral loans. Funding from these awards can be used towards living expenses and childcare costs.

Universities also have hardship funds which are available to help students in financial difficulty and these can be used to pay for childcare costs. Universities may also provide subsidised nurseries for students.

5.2 Further education

Help with childcare costs for further education students is provided through Learner Support Funds which are administered by individual colleges. Each learning provider has its own application process and the amount of funding available will vary with each scheme and each individual’s circumstances.

Care to Learn Students under 20 years of age at the start of a publicly-funded further education course who have children may be eligible for weekly payments through the Care to Learn scheme. The scheme provides students with up to £160 per child per week, (£175 per child per week for students in London.) Funding is also available to cover childcare deposits and registration fees. Care to Learn only covers childcare funding at Ofsted registered providers.

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6 Annex

6.1 Previous schemes on tax relief for childcare

In general, the costs of childcare or home help services are not tax deductible, although there has been some debate about whether they should be. In his 1990 Budget the then Chancellor John Major announced that from April 1990 employees would not be taxed on the benefits they received from using a nursery or playscheme provided by their employer.

In its 2004 Budget, the Labour Government announced a new tax relief for childcare benefits: from April 2005, employees would be entitled to receive up to £50 a week of childcare free of income tax and National Insurance contributions (NICs) where their employers contracted with an approved childcarer or provided childcare vouchers for the purpose of paying an approved childcarer. Employers would be entitled to a similar relief for the first £50 of this type of childcare for the purposes of both secondary Class 1 NICs and Class 1A NICs. 34 This limit was increased by £5 to £55 from April 2006. 35

In September 2009 the then Prime Minister, Gordon Brown, proposed that employer-supported childcare (ESC) should be withdrawn to fund the extension of free childcare for two-year olds. The proposal proved highly contentious and in December 2009, Mr Brown announced that the relief would be retained, but, from April 2011, it would be restricted in value so that all new voucher recipients would get the same amount of tax relief, to ensure that higher rate taxpayers did not benefit disproportionately. 36 In its first Budget in June 2011 the Coalition Government confirmed that it would take this measure forward. 37 The new income tax limit applied to higher rate and additional rate taxpayers who joined employer supported childcare schemes on or after 6 April 2011. 38

34 HM Treasury, Budget 2004, HC 301 2003–04, March 2004 para 5.26. Employees are charged primary class 1 NICs on earnings above the lower earnings limit. Employers are charged secondary class 1 NICs on their employees’ earnings above this limit and class 1A NICs on most benefits in kind they give to their employees.

35 HM Treasury, Budget 2006, HC 968 2005–06, March 2006, para 5.23. This change was made by Order: SI 2006/882.

36 HC Deb 14 December 2009 c846W 37 HM Treasury, Budget 2010, HC 61 2010–12, June 2010 para 2.123. Provision to this effect was made by

s35 of the FA 2011. 38 HMRC, Reduced childcare relief for higher earners (TIIN 8275), 23 March 2011

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As noted in section 2.2, this tax relief was withdrawn for those joining employer schemes after 4 October 2018. 39 In answer to PQs on this change Ministers have confirmed that parents on existing schemes “will be able to continue using vouchers as long as they work for the same employer and their employer continues to offer them.” 40 Further details of these developments are given in the Commons Briefing paper, Tax Relief for Childcare (CBP19).

39 Provision to this effect was made by Order: SI 2018/462 40 PQ176348 [on Child Care Vouchers]. 16 October 2018; See also, PQ284435 [on Child Care Vouchers], 9

September 2019.

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