Sajid Javid grilled on Universal Credit and National Insurance
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From October 5, grandparents or other relatives who provided unpaid childcare may claim additional credits to improve their state pension. School and nursery closures during the pandemic saw many more family members helping out with childcare while the child’s parents or main carer worked.
Some families may be newly eligible for a state pension boost, while others may be able to claim backdated credits for earlier years.
Kay Ingram, Chartered Financial Planner at Ingram’s Insights explained how the benefit works and who can claim for this boost in income.
She said: “This little-known benefit is called Specified Adult Childcare Credit. For those carers who are not paying National Insurance through employment or self-employment, and under state pension age, each year’s credit buys 1/35th of the state pension. This is currently worth £266 per year of extra state pension and increases in value when the state pension rises each year.
“Claims for backdated years credits can be made right back to 2011, when the scheme was first introduced. So if eligible for every year since then, up to £2,394 of extra state pension could be claimed.”
For some families, social distancing rules meant that childcare had to be provided remotely, via telephone or video call. The Government has confirmed that people who provided care through these arrangements will still qualify for the state pension boost and can claim for the financial years 2019 to 2020 and 2020 to 2021 if they have helped to care for a child remotely.
To get a full new state pension an individual must have 35 years National Insurance contributions or credits. These are usually earned through paying National Insurance or receiving credits, when in receipt of certain benefits, such as Jobseeker’s Allowance, Child Benefit, Working Families Tax Credits or Carers Allowance.
Those who have gaps in their National Insurance record will get less than the full state pension and a minimum of 10 years of contributions or credits is required to get any state pension.
Specified Adult Childcare Credit is one of the ways gaps can be filled at no cost, as one will receive a Class 3 NI credit for each week or part week they cared for a child. These credits help to build up entitlement to the state pension. One must complete an application in order to claim, and claims can be made via the Government website, completing form CA9176 or by calling 0300 200 3500.
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The application requires the personal details of the applicant (the family member caring for the child), the child’s details and the periods of care, personal details of the child’s parent or main carer (the Child Benefit recipient) and the applicant and the parent must also both sign their declarations on the application.
The credit can be claimed by a relative who provides free childcare to a child under 12 (or under 17 if the child is disabled) while both of their parents work. The carer must be over 16 and under state retirement age, which is currently 66 for both men and women.
The parents must each earn the equivalent of 16 hours per week paid at National Living Wage or above (currently £142.56 per week) and be entitled to Child Benefit. Specified Adult Childcare credits work by transferring the NI credit attached to Child Benefit from the Child Benefit recipient to a family member who is providing care for a related child under 12. Therefore, if Child Benefit has not been claimed for the child, there is no attached NI credit to transfer and Specified Adult Care credits cannot be received.
The child’s parent (or main carer) must agree to one’s application by countersigning the form, to confirm that their relative cared for their child for the period stated and that they can have the Class 3 NI credit for that time.
To claim, one must be ordinarily a resident in the United Kingdom, i.e., England, Scotland, Wales or Northern Ireland, but not the Channel Islands or the Isle of Man.
One should not apply for the credit if they already have a qualifying year of National Insurance – usually because they work or receive other NI credits. People can check their National Insurance record online to see if they have any gaps in contributions.
People who are receiving Child Benefit for the child should not apply for Specified Adult Childcare credits themselves, as they already get credits via Child Benefit. People who are the partner of, or live with, a Child Benefit recipient looking to transfer the parent’s credits from their spouse or partner to themselves should also not apply.
Claiming this credit does not affect the parents’ eligibility for other free childcare benefits.
There are some wrinkles to the scheme in cases where more than one family member is helping to care for a child, as Ms Ingram explained.
She said: “Where several family members help out, only one can claim the credit in each tax year, so families need to decide which carer can benefit most from the credits and is not eligible for credits in other ways. For example, where several grandparents look after the children of more than one family, or are eligible for benefit related credits.”
As Specified Adult Childcare credits work by transferring the NI credit attached to Child Benefit from the Child Benefit recipient to a specified adult, there is not a credit available for each child under 12 cared for, there is a credit for each Child Benefit recipient. For example, if two grandparents are caring for their son’s two children, there is only one credit available for transfer and the Child Benefit recipient must decide who should get the credit. However, if the grandparents are caring for their son’s child and their daughter’s child, there are likely to be two Child Benefit recipients and therefore two credits available for transfer.
To find out whether a carer already has sufficient credits to achieve a full state pension, a forecast of state pension can be obtained from www.gov.uk/check-state-pension.
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