Spring Budget 2017: childcare benefits set to double to £5k

The Chancellor has confirmed that from September 2017, free childcare for three and four year olds will increase from 15 to 30 hours, worth up to £5,000 for each child

Originally announced in July 2015, the move will cost the Treasury £715m by 2020-21.

In addition, the Chancellor confirmed that the government’s tax-free childcare policy, which will allow working families to receive up to £2,000 a year towards the cost of childcare for each child under 12, will be introduced in April.

‘By the end of this parliament, government spending on childcare will have reached £6bn a year,’ Philip Hammond told parliament. ‘These childcare measures represent a further huge step forward in support for ordinary working families, and for women in the workplace.’

At the same time, the Chancellor announced a consultation on improving maternity allowances. Mark Groom, tax partner at Deloitte, described the move as a ‘quid pro quo for increasing self-employed NIC rates’. He said: ‘Parental benefits are one of the few remaining differences in state benefits between the employed and self-employed.’

Currently, the self-employed qualify for maternity allowance at the flat rate of £139.58 or 90% of their earnings if lower) for 39 weeks during maternity. Employees receive the same amount in statutory maternity pay (SMP) for the last 33 weeks, but during the first six weeks, they qualify for 90% of their pay as SMP.

Philip Smith |Contributing editor, Accountancy Daily

Philip Smith is contributing editor at Accountancy Daily and a freelance journalist specialising in accountancy and tax matters. He ...

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