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PM launches childcare tax break, but won't claim it himself

By Andrew Woodcock and Tom Leese

David Cameron has revealed he will not be taking advantage of a new tax break for childcare, worth up to £2,000 per child each year.

The scheme, unveiled on the eve of the Budget and due to come into effect in autumn 2015, will help around 1.9 million families with children aged under 12, where both parents work, at a cost of around £750m.

Mr Cameron said the policy would be "a huge help to millions of families across Britain", allowing parents to make the choice to work longer hours.

But it has come under fire from some quarters for excluding couples where one parent does not work, and being offered to high-earning households with a joint income of as much as £300,000.

Visiting a nursery with Deputy Prime Minister Nick Clegg to launch the scheme, Mr Cameron revealed that he "won't be taking it up" for his own children, Nancy, Elwen and Florence. But Downing Street brushed off suggestions he was seeking to send a signal to other wealthy parents that they should decline the cash.

The system will effectively allow parents to escape paying basic rate income tax of 20% on childcare costs of up to £10,000 – up from the proposed £6,000.

Self-employed and part-time workers will also now be covered by setting the lower earnings threshold at £50 per week and provision will be made for those running fledging businesses.

The £1bn package also includes a £50m 'early-years pupil premium' for nurseries looking after the most deprived three and four-year-olds.

It was also confirmed families claiming universal credit will have 85% of childcare costs met by the state, up from 70%.

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