What does the autumn statement mean for childcare?

Chancellor George Osborne yesterday released his Autumn Statement outlining the government’s spending plans for the coming four years. But how will this affect childcare?

1. Tax Credits will stay the same, as the planned cuts were discarded

The £4.4bn planned cuts in tax credits were abandoned as government announced the taper rate (the rate at which benefits are reduced as each pound of a person’s income goes above the income threshold) and threshold rates for working tax credits and child tax credits will remain the same.

2. Eligibility restrictions around working hours and earnings brackets for free childcare will be introduced from 2017

The government has announced that its pledge to provide 30 hours of free childcare for three and four-year-olds in 2017 will be restricted to parents working more than 16 hours a week. George Osborne also announced plans to lower the upper income limit from £150,00 to £100,000.

3. Changes to Tax Free Childcare

The government will lower the upper income limit per parent from £150,000 to £100,000 and increase the minimum income level per parent from the equivalent of 8 hours to 16 hours at the national living wage. This will mean that working parents earning between £100,000-£150,000 that would previously have benefited from Tax Free Childcare, will now be better off with the existing childcare voucher scheme.

Iain McMath, CEO of Sodexo Benefits and Rewards Services and member of the Childcare Voucher Providers Association, comments on the latest update from the Chancellor:

“It’s great to see the government putting working parents at the forefront of the autumn statement – abandoning the cuts to Tax Credits will no doubt help many working parents throughout the UK who may otherwise have missed out on much needed support. The clarification surrounding the eligibility of free childcare also gives parents the confirmation needed to better plan their childcare costs in the future.

The existing childcare voucher scheme, available through employers, can continue to support working parents with childcare costs, saving them up to £933 per year. In the run up to 2017, and until planned changes have final confirmation, parents should take advantage of the extra support the government currently offers through childcare vouchers, putting them in a better position to choose the best option for their family in the future.”


For more information on the government’s autumn statement and what it means for childcare, please visit >