Draft guidance published: Tax-Free Childcare Payments

23 October 2014

The HMRC team responsible for the policy and design of tax free childcare payments have recently issued draft guidance on the subject.

The Chancellor of the Exchequer announced during his 2013 Budget speech that the Government would be introducing a new method of childcare support for working parents from Autumn 2015, at which time Employer Supported Childcare schemes will be closed to new entrants.

Since then we have seen no less than two consultation papers issued, one on the design and operation of tax-free Childcare (TFC) and one that sought views on childcare account provision. Both consultation papers have resulted in you giving up your valuable time to respond to the Policy team surveys and we thank you for your views.

One consistent request that members and the CIPP Policy team have made is for early sight of guidance, to enable the employer who currently operates an employer supported childcare scheme, (and who has no mandatory role with TFC) to look ahead and decide what action they need to take, if any, as the introduction of TFC approaches.

The provision of childcare nurseries is not impacted by TFC. However Childcare voucher schemes and directly contracted childcare schemes will be closed to new entrants. Parents who wish to open a tax free childcare account will receive a government top up, to a maximum of £2,000 per year (subject to contribution amounts made into the account).

We are grateful to see that draft guidance has been issued, so your views were heard. Thank you for your views and thank you to the team involved in this project for hearing and responding to those requests.

It has to be said that the Childcare Payments Bill is in the Committee stage and therefore may yet be subject to change and there is legal challenge ongoing as to whether NS&I, in partnership with HMRC, will be the account provider or the only account provider option available and so draft guidance inevitably will change.

However, and as you might expect, your views, once again are being sought on the draft guidance . If you would like to include your views within the CIPP Policy Team submission, then please contact Samantha Mann, Senior Policy & Research Officer at policy@cipp.org.uk or if you prefer you can submit your comments directly to tax-free.childcare@hmrc.gsi.gov.uk.

Thank you for your ongoing responses both with surveys and with the provision of anecdotal views and experiences when we meet at National forums, the APPC and other events. Your views are valued and also, it would seem with draft guidance being published one year ahead of going live, listened to and acted upon.