Specified Adult Childcare credits
Chris Broome – Chartered Financial Planner
Relatives looking after a child while a parent works could be entitled to a State Pension top up, but the vast majority of eligible claimants are missing out.
Today’s article explains why.
How does the Specified Adult Childcare Credits scheme work?
The Government scheme was introduced in 2012 to protect the pensions of grandparents who retire early to help care for grandchildren so their parents can go back to work.
A parent who gets child benefit for a child under 12 automatically gets NI credits towards their state pension. But a parent who goes back to work and pays NI doesn’t need the credit because she gets a qualifying year anyway.
Under the scheme, a parent can sign a form and pass the NI credit to the grandparent who is actually looking after the child. This means the grandparent benefits from the NI credit and it goes towards their state pension instead.
Why do NI credits matter?
Today, you need 35 qualifying working years to get the full state pension.
If you’re looking after grandchildren, and you need extra qualifying years, it’s worth getting recognition for the childcare you provide. But you need to claim the extra NI credits – they won’t automatically be added to your NI record.
So who’s eligible to claim these NI credits?
You can apply for specified adult childcare credits if:
- You’re under state pension age.
- You’re a grandparent, or other family member, caring for a child under 12.
- You live in the UK (and not the Channel Islands or the Isle of Man).
- The child’s parent (or main carer) is entitled to child benefit and has a qualifying NI year meaning he or she doesn’t need the NI credit you receive automatically with child benefit.
- The child’s parent (or main carer) agrees to your application.
For grandparents to be eligible for the NI credits, working parents need to give up the NI credits they receive when they claim child benefit and transfer them to the grandparent doing the caring.
Your application will be rejected if:
- You already have a qualifying year of national insurance – usually because you work or receive other NI credits.
- You’re receiving child benefit for the child – in that case, you’ll already get the parent’s NI credits automatically.
The number of hours a grandparent helps out with childcare is irrelevant to the claim. So even if it’s just one day a week, eligible grandparents should be able to claim.
How do I make a claim?
If you cared for your grandchild in the last tax year, you can apply for the NI credit to be transferred from the October after the end of that tax year.
To apply, the grandparent or the parent who’s transferring their NI credits needs to go to this Government website page.
How do I claim for previous years?
You can claim back for previous tax years if you were eligible.
Can grandparents share the credit?
Where more than one person is sharing responsibility for caring for a child under 12, the child benefit recipient is responsible for deciding who should receive the transferred credits.
What if the parent or grandparent works part-time?
If a grandparent looks after a child while the parent works part-time it’s still possible to transfer the child benefit credits provided the parent themselves has a complete NI record for the year.
The NI credits can be combined with any part-time work in the financial year.