Childcare Tax Credit Changes Explained: What This Means For Parents

The Government has announced significant changes to tax credits in a bid to help families with increasingly high childcare costs - the UK's are among the highest in Europe - but what does this really mean for you and how will the new system work?

What's the background to all this then?

Many working families are struggling with their childcare bills which have been on the up in recent years: The Family and Childcare Trust report that the average weekly cost of 25 hours of care for a two-year-old is now nearly £110. Of course the cynical among you will be pointing to the fact that there's a general election due next year and politicians are keen to woo families...

Childcare tax credits aren't totally new are they?

At the time of writing, tax breaks are available to parents with employers who offer Employer Supported Childcare vouchers but this only covers around 5 of childcare costs refunded under separate arrangements. This figure was previously 70 tax payers with only one child using childcare.

What if I pay in too much money and then don't need so much childcare because my circumstances change? Can I get a refund?

Yes, you'll be able to get a full refund of the amount you paid in but don't go thinking you'll be quids in - the extra 20% provided by the Government will obviously go back to them not to you.

My ex-partner and I share care of our daughter equally, so can we both sign up and use the scheme?

Only one parent will be able to join the scheme - you will have to agree which of you does so but we understand that if that isn't possible HMRC will decide.