The government has increased its planned childcare allowance to a maximum of £2,000 per child.
From September next year, parents of children under 12 will be able to claim a 20 per cent rebate on their childcare costs, up a maximum of £2,000 for each child, provided both parents are employed.
When originally announced last year, the scheme was limited to £1,200 per child. It was to be phased in over a number of years and would only be open to families earning less than £150,000 per year.
The government has now agreed to introduce the scheme for all eligible children within the first year. They claim around 1.9 million families will benefit from the new scheme.
Parents on maternity, paternity or adoption leave, those starting businesses and people working part-time who earn more than £50 per week will all also be eligible for support.
The current Employer Supported Childcare scheme, which only benefits around 450,000 families, will be phased out.
Deputy Prime Minister Nick Clegg told the BBC:
“This is really simple. For every 80p you pay, the government will pay 20p.”