Child tax breaks delayed

Parents with children under five hoping for tax breaks were disappointed last week as plans for tax relief were postponed amid disagreement between ministers.

It was hoped that the Coalition would agree a tax break plan to help all working families but particularly those in lower incomes.

The plans are believed to have stalled amid rumors that the conservatives want universal tax breaks whereas the Liberal Democrats wanted the measures to be aimed at those on low incomes.

The plans could lead to working women being able to claim a flat rate tax allowance of around £2,000 towards paying for someone to look after children under five.

The new tax break scheme would replace the current childcare element of tax credits which are targeted at low income families.  They would also replace the current tax breaks available including childcare vouchers which allow families to pay for some of their childcare out of pre-tax income.

Political discussions are ongoing as to whether the tax break will be universal or means tested but it is hoped that the scheme could be in place before the next general election.

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