14/08/2014 16:48 BST | Updated 22/05/2015 10:12 BST

Parents Can Claim Back £1200 Or 20 Per Cent Of Childcare Costs, Says Government

New tax-free childcare vouchers to benefit working families

A new tax-free childcare scheme is to be rolled out by the Government.

Around 2.5 million working families will benefit from the new system, in which parents with children up to five will be eligible to claim back 20 per cent of their childcare costs, out of a total of around £6,000.

The scheme will eventually include all children under 12.

The new system will enable parents to open an online account with a voucher provider and have their payments topped up by the government. For every 80p parents pay into their account, the state will add 20p to a total of £1,200 for each child.

To take advantage of the new voucher scheme, both parents will have to work, or in the case of lone parent families, one parent, and each parent must earn less than £150,000 a year.

Two-parent families with only one person in employment will not be eligible for support – a move said by the BBC to 'underline the Government's support for making work pay'.

The new system will be part funded by the ceasing of the existing voucher scheme, and by funding moved from other Whitehall departments.

Mums and dads will be able to use their vouchers for childcare at any Ofsted regulated facility.

The full outline of the new scheme will be proposed in a consultation before being finally drawn up. It will not be implemented until 2015, election year.

David Cameron said the £1.4bn scheme would be a 'boost direct to the pockets of hard-working families', while deputy Prime Minister Nick Clegg said he wanted to help 'every family to get on in life'.

"The rising cost of childcare is one of the biggest challenges parents face and it means many mums and dads simply can't afford to work," Mr Clegg said.

"This not only hurts them financially, but is bad for the economy too. This announcement of a £1bn investment in childcare will make sure it pays to work."

However, Labour's shadow education secretary Stephen Twigg said the measures would not make up for the cuts the government has already made to support for children, and that working 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'.

What do you think?

Will this voucher scheme help you or is it too little, too late to have any affect on your childcare costs?