Childcare tax break fillip for low earners

THE CHANCELLOR has bowed to pressure for help for childcare for working couples. He is planning to announce in the Budget that families earning less than pounds 20,000 will get a tax break for 75 per cent of their childcare costs.

With Tony Blair today taking a "welfare roadshow" to Reading, the new childcare credit which will cost the Exchequer about pounds 1bn, was leaked to take the pressure off Harriet Harman, the Secretary of State for Social Security.

The Independent is campaigning for a tax break of pounds 1,800 a year, less than pounds 8 a week on the pay cheques of most parents.

Under Gordon Brown's plan, less well-off families will have to pay the full cost of child care, but they will be able to claim back 75 per cent in a tax credit from the Inland Revenue, leaving them to meet the bill for 25 per cent of the childcare costs.

The aim is to encourage families to into work, if they can find jobs. "They need help to care for their children while they are at work," a source said.

There will be a ceiling on the total that can be claimed back of around pounds 120 per week, about the same cost as a child minder. The tax break will be available for the first two children.

Friends of Ms Harman last night said that she had battled for the tax break, but it also helped to answer critics who attacked her for bowing to Treasury pressure in allowing cuts to go ahead in one-parent benefits. That led to the first serious Labour backbench revolt to face the Prime Minister before Christmas.

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