Parliamentary Search

Written question asked by Lord True (Conservative) on Tuesday, 14 July 2015, in the House of Lords. It was due for an answer on Tuesday, 28 July 2015. It was answered by Lord O'Neill of Gatley (Conservative) on Monday, 27 July 2015 on behalf of the Treasury.

Tax Allowances: Children

Question

To ask Her Majesty’s Government, for each financial year from 2015–16 to 2020–21, what are the estimated annual costs of providing tax relief for (1) tax-free child credit, and (2) child trust funds.

Answer

Tax-Free Childcare (TFC) will be launched in early 2017, and will give up to 1.8m families 20 per cent support towards their childcare costs, up to a maximum government contribution of £2,000 per child, per year (£4,000 per child, per year, for disabled children).

The estimated total costs of TFC in each year are:

2015-16

2016-17

2017-18

2018-19

2019-20

2020-21

Cost of TFC (£m)

0

75

570

650

700

770

These costs are expected to rise to around £1 billion per year in steady state.

Child Trust Funds (CTF) are long-term tax-free savings accounts for children. Since 2011, children without a CTF can open a Junior ISA instead. Existing CTF accounts can still receive contributions. The contribution limit per CTF for the 2015-16 tax year is £4,080.

The cost to the government of exempting CTF account savings from income tax is set out in HM Revenue and Customs’ “Estimated cost of minor tax allowances and reliefs” and is negligible in 2013-14 and 2014-15. The cost is also expected to be negligible in 2015‑16 to 2020–21.

Secondary information

Type
Written question
Reference
HL1429
Session
2015-16
Subjects
Childcare Child trust fund Tax allowances
Contains statistics
Yes
Link
View this Written question on www.parliament.uk