Government delays roll-out of childcare tax rebate till 2017

The Government has announced that the roll-out of its childcare tax rebate will be delayed until early 2017.

The scheme through which employees can claim back up to 20% of childcare costs up to a limit of £2,000 a year was expected to be rolled out from the end of this year, but the Government announced today that it will be delayed till 2017 due to a court case brought by a group of childcare voucher companies.

The Supreme Court ruled today that the government’s proposals for delivering the tax rebate were lawful. The Childcare Voucher Providers Association and Edenred had contested that the contract awarded to Atos to provide the administration service for the new scheme was unfairly awarded and should have been subject to an open tender.

Existing childcare voucher schemes will remain open to new entrants until the rebate is launched.

Exchequer Secretary to the Treasury, Damian Hinds said: “We are pleased that the government’s proposals for delivering Tax-Free Childcare have been found to be clearly lawful. This government is absolutely clear on the importance of supporting families with their childcare costs.”

Neil Leitch, chief executive of the Pre-school Learning Alliance, said: “This news will come as a major blow to government, and many parents will be understandably disappointed by such a significant delay to the roll-out of the childcare tax rebate scheme. That said, we remain unconvinced that demand-side subsidies are an effective way of tackling rising childcare costs in the long-term. Evidence has shown that it is supply-side funding that is vital not only for lowering costs for parents, but also for supporting providers to deliver high-quality early years provision – a vital aspect of childcare policy that has been largely overlooked in the face of the government’s ‘back-to-work’ agenda.

“As such, we hope that the government will use the additional time prior to the roll-out of tax-free childcare to focus on addressing the root cause of cost rises: insufficient funding. Doing so will help ensure that, despite the delay in the roll-out of the scheme, steps are still being taken to support parents by ensuring a sustainable supply of childcare provision that is both high-quality and affordable.”

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