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Child Care Tax Credit

Treasury written question – answered on 8th June 2011.

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Photo of Michael Dugher Michael Dugher Shadow Minister (Defence)

To ask the Chancellor of the Exchequer what assessment he has made of the effect on incentives on single parents to work of the end of childcare tax credit.

Photo of David Gauke David Gauke The Exchequer Secretary

When estimating changes to marginal deduction rates, it is reform to the tax and benefit system as a whole that is important to households, rather than certain subsets of it.

Parents, including lone parents, currently receive support to pay for childcare through the childcare element of working tax credit. In addition, the Government maintained free early learning for three and four year olds, and extended 15 hours a week of free early education and care to all disadvantaged two year olds from 2012-13.

The new universal credit will replace the current complex system of means-tested working age benefits with an integrated payment over the next two Parliaments, reducing fraud and error and ensuring that work pays. The universal credit will improve financial work incentives by ensuring that support is reduced at a consistent and managed rate as people return to work and increase their working hours and earnings.

The Government are working with key stakeholders, drawing on their expertise, to establish which options will best support parents to meet the costs of childcare in the future within or alongside universal credit. Details of the new proposal will be set out shortly.

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