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Tax-free childcare gives small boost to parental employment

Plans to double parents' entitlement to tax-free childcare from 15 to 30 hours a week for 3 - 4 year olds will have a small impact on parental working patterns.

Research by the Institute for Fiscal Studies (IFS) and University of Essex looked into the effect of children starting primary school on their parents' work lives.

Key findings:

  • increasing the offer of tax-free childcare during term time had little impact on fathers or mothers working patterns with children under the age of 4
  • young children starting full-time school increases the proportion of mothers in work by 3.5 percentage points, equivalent to 12,000 more mums in work
  • an additional 15-20 hours per week for free childcare for 4 year olds during term time increased the amount of time spent in childcare by 76 hours a year
  • parents save on average £410 a year in childcare fees when their children move from nursery to full-time school.

Dr Sarah Cattan, senior research economist at IFS, said:

“Offering free childcare does, of course, save money for parents who already use formal childcare. But to facilitate parents’ ability to work further, the government’s various childcare subsidies may need to enable families to access sufficient hours of free or subsidised child care throughout the year.”

Contact us today to discuss tax-free childcare.