Government proposals to introduce tax-free childcare for working families have been declared lawful by the Supreme Court.

The scheme, announced during Budget 2014, will increase government childcare provisions up to £2,000 per child and extend them to all children under 12 years-old within the first year of the scheme.

The court ordered that the development of the scheme be suspended which has prevented key delivery steps from going ahead. This is expected to delay the introduction of the scheme to early 2017, instead of its originally planned 2015 launch.

The delay occurred when a group of childcare voucher providers involved in delivering the current employer-supported childcare scheme mounted a legal challenge to tax-free childcare on grounds that it broke EU procurement law.

The employer-supported childcare scheme will continue to accept new entrants until tax-free childcare is introduced.

Exchequer Secretary to the Treasury, Damian Hinds, welcomed the ruling:

“We are pleased that the government’s proposals for delivering tax-free childcare have been found to be clearly lawful. This government is absolutely clear on the importance of supporting families with their childcare costs.

“We are now pressing ahead with the scheme as part of our ongoing commitment to support working families.”