Question to the HM Treasury:

To ask the Chancellor of the Exchequer, what assessment she has made of the impact of excluding postgraduate stipends from the definition of qualifying income for Tax-Free Childcare on families where one parent is undertaking doctoral research funded by a government department.

Tax-Free Childcare (TFC) is designed to help parents cover childcare costs so they can enter work, stay in employment, or increase their working hours. As a result, eligibility is based on income from paid work: each parent is generally expected to earn at least the equivalent of 16 hours per week at the National Minimum or National Living Wage through employment or self-employment.

Consistent with this objective, TFC is not available for those engaged solely in unpaid activities such as full-time education or training. PhD stipends are generally designed to cover living expenses during a period of study and research, rather than to remunerate employment. Consequently, HMRC does not treat stipends as taxable earnings, and they are not subject to Income Tax or National Insurance. As they are not treated as earned income, these stipends do not count towards the minimum earnings threshold for TFC. Therefore, individuals whose main source of support is a PhD stipend are not eligible for the scheme.