Overview

The Childcare Payments Bill establishes a new government scheme providing financial assistance towards childcare costs for eligible families. It involves top-up payments of 25% of childcare costs paid into a special childcare account, alongside restrictions on existing tax exemptions for employer-provided childcare.

Description

The bill introduces a system of "top-up payments" from HMRC (Her Majesty's Revenue and Customs). These payments, capped at £2,000 per 3-month entitlement period, are equal to 25% of qualifying childcare costs. Funds are deposited into a designated "childcare account," managed by HMRC or an approved provider. Eligibility criteria include: being at least 16 years old, responsible for the child, residing in the UK, and both parents engaging in qualifying paid work with a combined income below a specified limit. Claimants cannot receive Universal Credit or participate in other relevant childcare support schemes. The bill also modifies tax exemptions for employer-provided childcare vouchers and schemes.

Key Aspects:

• Top-up payments: 25% of qualifying childcare costs, capped at £2000 per 3 months.
• Childcare accounts: Required for participation, managed by HMRC or an approved provider.
• Eligibility criteria: Age, residency, employment, income, and existing benefits.
• Tax changes: Restricts tax exemptions for employer-provided childcare.
• Penalties and Enforcement: Includes penalties for false declarations, non-compliance, prohibited payments, and dishonest actions; plus powers to recover top-up payments and impose disqualification orders.
• Reviews and Appeals: Provision for reviews of HMRC decisions and appeals to a tribunal.

Government Spending

The bill will increase government spending, the exact amount dependent on the number of eligible families and the amount of childcare costs claimed. The bill does not specify the total projected expenditure.

Groups Affected

• Families with children: Eligible families may receive significant financial support towards childcare costs.
• Working parents: The scheme is designed to support working parents, enabling them to afford childcare and remain in employment.
• Childcare providers: The scheme will likely increase demand for registered childcare services.
• Employers: The changes to tax exemptions may impact employer-sponsored childcare schemes.
• HMRC: HMRC will administer the scheme, processing applications, making payments, and enforcing regulations.

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