Plan for hike in childcare tax credit is a welcome move

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TAX breaks of up to £2,000 for childcare have been welcomed by the Hampshire Chamber of Commerce.

The government is today due to announce the scheme, which will allow parents to choose to go out and work longer hours, according to Prime Minister David Cameron.

It won’t come into play until autumn 2015, and is expected to help around 1.9m families.

Parents who both work are to be given childcare tax breaks worth up to £2,000 a year for every child under 12.

The government said it will pay 20 per cent of the costs of nurseries, nannies, childminders and breakfast and after-school clubs.

This is up to £10,000 a year per child, with no limit on the number of children that can be claimed for.

Self-employed and part-time workers will also now be covered – anyone earning more than £50 a week will be eligible.

Stewart Dunn, chief executive officer of the chamber, said: ‘We welcome the increase on tax credits for families.

‘However we would urge the government to bring this scheme forward.

‘Currently it’s not due to come in until autumn 2015, but families need help now.

‘Wages haven’t risen, but there has been growth in the cost of living.’

The head of online forum Mumsnet has cautiously welcomed the news.

Chief executive Justine Roberts said: ‘It’s great that the government has listened to the concerns of parents and increased the support for the many parents struggling with high childcare costs.

‘Increasing the threshold on which you can claim tax relief to £10,000 per child will be significant for many families and, including over-fives much sooner will reassure parents who feared losing support for their older children.

‘But there remains surprise on Mumsnet that the tax relief is extended to families whose joint earnings are as much as £300,000, particularly when child benefit was capped on joint earnings of £100,000.’