Attention - the grandparent child-caring army!
Until now, children could go to their grandparents to be looked after while their parents are working; and if grandparents have applied for approval as child carers, parents are able to claim help with child care costs through working tax credit. A little publicised change in the rules for approved carers means for parents to continue to get child care support, grandparents who have used this route to become qualifying childminders will have to look after at least one non-related child.
It is a fact of modern life that many working parents could not manage without the child-caring help provided by an army of willing grandparents. Questions have recently been raised in the House of Commons about the tax credit implications of this.
On 2 March 2005 Mr Dhanda MP asked the Chancellor of the Exchequer if he will make it his policy for child-care provided by grandparents to be considered eligible for the working tax credit child care element.
Dawn Primarolo, the Paymaster General replied:
"The child care element of working tax credit is only available for the costs of formal child care and is in line with the Government's commitment to promote good quality and safe provision.
"Relatives can provide a high standard of child care in a safe environment but the Government do not wish to impose requirements of registration on family members.
"If grandparents are registered childminders, then the cost of their services will count as eligible child care for the purposes of claiming the child care element of the working tax credit. However, if the child care is being provided from the child's home, then it will not be treated as eligible child care."
Not all grandparents will wish to go through the processes necessary to become registered childminders, but more may be inclined to apply to become 'approved carers'. If grandparents do become qualifying childminders, the parents may benefit from the increased tax credits and the grandparents may not suffer too much tax on their child-caring receipts.
The hidden catch
However, what the Paymaster General failed to mention in her reply to Mr Dhanda is that from 6 April 2005 grandparents will not be able to apply for approval as qualifying childminders, when providing care for their grandchildren outside the child's home,unless they also provide care for children to whom they are not related.
If you are a grandparent who has already taken the trouble to apply for approval as a childminder under the old rules (and you only look after your own grandchildren) then you will only be allowed to remain as a qualifying provider up to and including 31 December 2005. After this date you will either have to begin to look after other children or your (grown-up) children will lose their tax credits. Your tax liability on your child-caring receipts will not change, of course!
LITRG and others are pressing the Revenue to publicise this change, which may affect many in the grandparent child-caring army. The rules for any grandparents who areregistered childminders does not appear to have changed but the rules for getting registered childminder status are considerably more rigorous and, as noted above, perhaps less likely to be used by grandparents.
We also fear it is likely to result in less, formalised care by grandparents.
Contact Name: John Andrews (Tel: 0844 579 6700, Fax: 0844 579 6701)