Childcare Payments Bill (HL Bill 56 of 2014–15)

This note provides an overview of the Childcare Payments Bill, and its passage through the House of Commons earlier this year, ahead of its second reading in the House of Lords on 9 December 2014.

The Childcare Payments Bill would provide for a ‘tax-free’ childcare payments scheme, to assist working parents in meeting the cost of childcare. Through the scheme, the Government would make a top-up payment of £2 for every £8 a parent pays towards childcare, via an online account. Government support would be capped at a maximum of £2,000 per child annually. In order to receive childcare payments, parents would be required to make a ‘declaration of eligibility’ stating that they meet a number of criteria. Tax-free childcare would not be available to tax credit or universal credit claimants. Once a declaration of eligibility is made, the Bill would make provision for other such payments to the claimant to cease. The scheme would be applicable to children under the age of 12, or 17 in the case of those children with disabilities. The new system would effectively replace the existing scheme of Employer-Supported Childcare, which would remain but be closed to new entrants. A number of amendments were made to the Bill during its consideration in the House of Commons, including to broaden the eligibility criteria as they apply to self-employed parents, and to extend the period of time prior to starting new employment that a person could apply to the tax-free childcare scheme.