Childcare tax relief plans amended

Date: 4th December 2009

Government plans to reduce tax breaks on childcare will be less radical than initially thought, in a move which will be supported by some Labour backbenchers.

Tax relief on the benefits will be reduced by around 50 per cent for high earners rather than scrapped entirely, the BBC reported.

Prime minister Gordon Brown has contacted backbenchers, 43 of whom had previously signalled opposition to the plans, to tell them of the change.

Initially, the government proposed that parents who pay income tax at 40 per cent should no longer get any relief at all on childcare costs.

This reform would be imposed on all new entrants to the scheme from 2011.

However, under the amended plans, these taxpayers would get relief at the basic rate of 20 per cent.

Speaking to the broadcaster, ex-health secretary turned backbencher Patricia Hewitt said: "Assuming this has now been confirmed, I'm delighted.

"Gordon Brown and the government have made the right decision on this. What will happen from 2011 is we will continue to be able to give families tax relief on their child care vouchers but in a way which is frankly fairer than the present system."

Around 300,000 families currently use the tax break.

Posted by Thomas Fletcher