Childcare tax plans 'will not help poorest households'

A think tank has warned that the government's plans for increased tax breaks for two-earner families will not help the poorest households

Resolution Foundation, a think tank that conducts research into how to improve living standards for those living on low and middle incomes, said the government needs to adapt the scheme to help the poorest working families.

"Our analysis shows that only a tiny fraction of the new money will benefit the lowest-income working families. Just 160,000 families in the bottom 40% of the income distribution will qualify for extra help, compared to 1.7 million in the top 40% by income.

"Within universal credit, support will only go to higher income households. More than 900,000 working families with children who will receive universal credit will be excluded from extra childcare support because they do not earn enough to pay income tax.

"These are families where at least one parent is in low-paid, part-time work.

It's crucial that, following this consultation, the Government adapts its scheme to help the poorest working families - the very people who find high childcare costs the biggest barrier to work."