Budget 2013: childcare vouchers explained

After months of lengthy discussions, Chancellor George Osborne finally confirmed in the Budget 2013 that the government will offer families childcare vouchers worth up to £1,200 per child annually under a new childcare scheme estimated to be worth about £1.4 billion. If all goes according to plan, working parents earning up to £150,000 will get up to £1,200 each year to help with child care.

The promise to parents

The government is promising that starting 2015 working parents will be able to open an online account with a voucher provider and have the government pay up to a fifth of their childcare costs under the new childcare vouchers scheme. The total sum paid by the government will be to the tune of £1,200 per year per child. Parents with children under five years old will be the first to benefit from the scheme before households with children under 12 years old come into the fold.

Childcare voucher scheme eligibility

Only households where both parents work will qualify for benefits under the new childcare voucher scheme due to come into force in 2015. Households where one parent works and the other stays at home to care for the children will not qualify to receive benefits in the scheme.

Both parents must work at least 16 hours or more a week and earn up to £150,000 a year to claim benefits from the scheme. You may join the childcare voucher system if you and your spouse earn a combined income of up to £300,000 a year.

However, those on tax credits will not be eligible for full benefits. You will only get up to 70% of childcare costs paid by government under an existing arrangement if you and your partner both work 16 hours or more aweek

Criticism to the new childcare scheme

While many have welcomed the government’s new childcare vouchers system, it has not been without its share of criticism. The government has been crisicised for what critics say is a scheme that unfairly penalises stat-at-home parents. Critics say the new childcare system will sideline 1.2 million parents who stay at home and who already lost their child benefit earlier in 2013.

Mr Osborne while explaining what's in the budget said the system would help “working parents struggling with the costs of childcare, and the mother wondering whether it makes financial sense to get a job.” Perhaps this move is meant to encourage people to get out there and work.

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