Campaigners welcome new exception for carers from tax credit cutbacks

Published on 19 March 2012

A coalition of charities working for carers and disabled people, led by the LITRG, very much welcome the Government’s decision to allow couples where one partner is entitled to carer’s allowance to continue getting working tax credit (WTC) by working just 16 hours a week. Without this change, they would have been required to work 24 hours a week, with one partner working at least 16 hours, or face losing WTC.

The charities wrote to the responsible Minister, Chloe Smith MP, on 20 December 2011 and are delighted to see the change announced in regulations just laid before Parliament.

At the same time, such couples will for the first time be able to claim tax credits to cover their childcare costs.

John Andrews OBE, Chairman of LITRG, commented:

“We and our colleagues in partner organisations are delighted that the Government has listened to our concerns and agreed to this valuable change in their proposals. Couples with disabled children, who have to divide their time between caring for them and earning for the whole family, will find that a considerable burden and worry has been lifted from their shoulders. Without this relaxation they would have faced losing up to £3,870 a year they could ill afford.”

“While we very much welcome this change of direction, we remain very concerned for the hundreds of thousands of other couples facing this new 24 hour restriction, particularly at a time of economic difficulty when even those in work are not always able to secure the extra hours needed to keep their WTC entitlement going.”

The list of charities who wrote to the Minister is as follows:

Carers UK

Disability Benefits Consortium (DBC)

Every Disabled Child Matters

LASA

Learning Disability Coalition

Further details

Hitherto, couples with children could qualify for working tax credit (WTC) if one member of the couple was working at least 16 hours a week or more. But from April 2012, they will have to work 24 hours a week between them, not 16, with one member of the couple working at least 16 hours a week.

It was always intended that this change would not apply to couples if:

  • the partner who is working at least 16 hours per week is eligible for the disability element of WTC, or is aged 60 or over; or
  • one partner works at least 16 hours a week and the other partner is ‘incapacitated’, an in-patient in hospital, or in prison.

It has now been confirmed that a couple in which one of the partners is a full-time carer and entitled to carer’s allowance will also be exempt from the 24 hour rule – that is, they can carry on receiving WTC so long as the other partner works at least 16 hours a week.

In addition, from April 2012 the exception for a couple in which one of the partners receives carer’s allowance will extend also to the childcare element of WTC. In other words, the couple can receive support for childcare costs through tax credits so long as the partner whose time is not taken up with caring responsibilities is working at least 16 hours a week.

This is an entirely new exemption. Previously support for childcare was available to lone parents working a 16 hour week, whereas each partner in a couple had to work at least 16 hours a week before the couple could jointly claim the childcare element (i.e. 32 hours a week between them). The only exceptions for couples were if one partner was incapacitated, an in-patient, or in prison, and the other worked at least 16 hours.

It is not yet clear just how HMRC will operate the new rule. Their systems may not be able to identify couples who fall within one of the exceptions, and those couples may have to come forward and tell HMRC.

(19-03-2012)

Contact: Victoria Todd (please use form at http://www.litrg.org.uk/ContactUs)