Queen’s Speech: Campaigners raise concerns about delivery of childcare support plans

The Low Incomes Tax Reform Group (LITRG) has welcomed the Government’s intention, set out in the Queen’s Speech yesterday, to offer support to working families. The Group has a number of concerns about how the scheme will operate in practice, and in particular how it will interact with other childcare support schemes.

In March 2013, the Government announced they would be introducing a Tax-Free Childcare scheme to give eligible families the equivalent of 20% basic rate tax relief on their childcare costs. This will be worth up to £2,000 a year per child and was confirmed in yesterday’s announcement in the Queen’s Speech. The scheme will start in September 2015.

Commenting on the announcement set out in the Queen’s Speech, LITRG Chairman Anthony Thomas said:

“Affordable childcare is one of the most pressing issues facing families today, so it is good to hear that the Government are showing signs that they are listening to working households with children. However, while the Government are making moves in the right direction we do have concerns about the delivery of the Tax-Free Childcare scheme and also how it will interact with other childcare support schemes.

“Although built on a simple idea that the Government will give parents 20 pence for every 80 pence they pay for childcare, up to a maximum Government support of £2,000 a year per child, the proposed design and rules of the scheme are quite complicated and definitions are not aligned with other childcare schemes.

“We have particular concern about the interaction between this new scheme and other support for childcare such as childcare vouchers and the childcare elements of working tax credit and universal credit. It is going to be extremely difficult for people to understand if a scheme applies to them and which is better for them financially.

“Some people will need to make decisions to leave one scheme and choose another in order to access more financial support. The Government will need to provide clear guidance that fully explains the eligibility criteria and a comprehensive calculator that shows the financial impact of each scheme based on the family’s circumstances.

“Childcare costs are a significant factor for families when deciding whether they can return to or remain in work. As such, it is crucial that these points are addressed by the Government, and are explained clearly. It would be counter-productive to introduce what could be a very useful scheme for families, only for it to be misunderstood and costly mistakes made.”

Notes for editors:

The Government’s background briefing notes on the Queen’s Speech 2014 can be accessed here.

The Low Incomes Tax Reform Group (LITRG)

LITRG is an initiative of the Chartered Institute of Taxation to give a voice to the unrepresented. Since 1998 LITRG has been working to improve the policy and processes of the tax, tax credits and associated welfare systems for the benefit of those on low incomes.

The Chartered Institute of Taxation (CIOT)

The CIOT is the leading professional body in the United Kingdom concerned solely with taxation. The CIOT is an educational charity, promoting education and study of the administration and practice of taxation. One of our key aims is to work for a better, more efficient, tax system for all affected by it – taxpayers, their advisers and the authorities. The CIOT’s work covers all aspects of taxation, including direct and indirect taxes and duties. Through our Low Incomes Tax Reform Group (LITRG), the CIOT has a particular focus on improving the tax system, including tax credits and benefits, for the unrepresented taxpayer.

The CIOT draws on our members’ experience in private practice, commerce and industry, government and academia to improve tax administration and propose and explain how tax policy objectives can most effectively be achieved. We also link to, and draw on, similar leading professional tax bodies in other countries. The CIOT’s comments and recommendations on tax issues are made in line with our charitable objectives: we are politically neutral in our work.

The CIOT’s 17,000 members have the practising title of ‘Chartered Tax Adviser’ and the designatory letters ‘CTA’, to represent the leading tax qualification.


James Knell
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