Nursery World - Families could be worse off under tax-free childcare

As the Government presses ahead with plans to introduce Tax-Free
Childcare (TFC) and offer 30 hours a week of free childcare for working
parents, childcare voucher companies are warning that middle-income
families could miss out on savings.

Unlike childcare vouchers, all parents in the household must be working to be eligible for TFC, which comes in from September and replaces the vouchers, and also for the increase to 30 hours of childcare, due in 2017.

Voucher companies argue that because doubling the free hours will lead to families spending less on their childcare costs, many parents will not benefit fully from savings provided through TFC.

Under TFC parents need to spend £8,000 a year on childcare to receive the maximum savings of £2,000 a year, because the Government is subsidising 20 per cent of each child's childcare costs. But with the free entitlement going up to 30 hours a week, many parents may be better off using vouchers.

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