Clause 12 - Childcare exemptions: meaning of disabled child

Part of Finance Bill – in a Public Bill Committee at 3:15 pm on 16 May 2013.

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Photo of Sajid Javid Sajid Javid The Economic Secretary to the Treasury 3:15, 16 May 2013

Clause 12 will ensure that parents of children in receipt of personal independence payment will continue to receive tax relief for employer-supported child care. This is purely a technical change affecting children who are 16 years old and ensures that the move to PIPs from the disability living allowance will not impact on current tax-free child care support.

The Government are reforming the welfare system and the Department for Work and Pensions has begun a phased introduction of personal independence payments. The parents of children who receive DLA can claim tax relief on employer-supported child care for a year longer than is otherwise allowed. The clause ensures that the parents of children who receive the personal independence payment will be treated in the same way, by amending income tax legislation to include the appropriate references.

Children under 16 will continue to receive DLA, so the changes made by clause 12 are not relevant to them. Rather, these changes mean that those with parental responsibility for children in receipt of either DLA or PIPs will be eligible for the same tax relief for child care. We believe that the numbers affected are small, but this change is being made to ensure consistency of treatment. To add a bit more information on numbers, about which the hon. Lady asked specifically, some 600,000 employees in total currently use employer-supported child care. Most employer-supported child care is used for pre-school-age children and a much smaller proportion is used for children aged 15 or 16. In the tax information and impact note issued by HMRC, we stated that some 50 individuals may be negatively affected, but I stress that that is the best estimate that HMRC has at this point.

The changes reflect previous discussions in the House during the passage of the Welfare Reform Act 2012 and are wholly consequential to the changes already in place. Furthermore, we published the clause for consultation in December and received no comments and no suggestions. I move that the clause stand part of the Bill.