⚠️ We are working hard to ensure this guidance is up to date. However, you should bear in mind that things may change as the government respond to the ongoing situation.
Coronavirus: School closures: family members might be able to claim state pension ‘babysitting’ credits
The coronavirus (COVID-19) resulted in school closures, with many people having to make alternative childcare arrangements.
While the government guidance urged people not to leave children in the care of those who might be particularly vulnerable to the coronavirus, other family members who are not in these groups might have stepped in to offer support – particularly as lockdown measures eased.
Where families have made such arrangements, it might be helpful to note that family members who look after a relative’s children may be able to increase their future state pension by claiming Specified Adult Childcare credit.
Families might need to consider whether such claims are relevant for each tax year in which such childcare arrangements have been in place. In the context of the coronavirus pandemic, this could be for the tax years 2019/20 (which ended on 5 April 2020), and again after the end of the 2020/21 tax year (to 5 April 2021).
How might the coronavirus situation affect national insurance credits for family members providing childcare?
People who look after the children of other family members might not themselves be paying national insurance contributions or otherwise be entitled to national insurance credits. This could mean they are not building up entitlement to the state pension.
Coronavirus might have resulted in two effects:
First, grandparents are probably the biggest group of such ‘family carers’, but due to coronavirus, they have stopped providing childcare for a period – particularly if they are older or otherwise vulnerable to coronavirus. This means that they might not be eligible to claim national insurance credits while they have not been providing childcare.
The law says that the credits can be transferred for ‘relevant weeks’ in which care was provided for a child under 12. So, it could be that coronavirus means that, say, a grandparent provided care for relevant weeks in the 2019/20 tax year up to mid-March 2020, but due to the introduction of social distancing measures and then full lockdown, they stopped providing that care. Based on the strict wording of the law, it would seem they cannot claim Specified Adult Childcare credits for weeks that they are not actually providing the care. It is not clear whether the government would consider relaxing this requirement for those who would have been providing care if it were not for the virus outbreak.
Second, other adult relatives such as an aunt or uncle can also make claims, so if they start providing childcare, they might become eligible for credits for the weeks in which they provide such care.
A list of who is considered a ‘family member’ for the purposes of these credits is found on GOV.UK’s Specified Adult Childcare credits factsheet.
Why are National Insurance credits available to family members providing childcare?
While the parent (or carer) is working, they are probably paying national insurance contributions (NICs), even if they are paying at a zero rate. This is important because NICs build up entitlement to the state pension, among other benefits.
However, the parent (or carer) will also be receiving NIC credits towards their state pension, through a claim to child benefit. Even if the parent (or carer) has chosen not to receive the child benefit, perhaps because of the High Income Child Benefit Charge, they will still receive these NIC credits as long as they have claimed the child benefit.
How can this help the family members who are providing the care?
Some parents (or carers) will be receiving NIC credits as a result of their child benefit claims, but they do not need them because they are paying NICs through their employment or self-employment. This means it is possible for the ‘spare’ credits (Specified Adult Childcare credits) to be transferred to a relative who looks after the child.
Those credits can count towards the claimant’s eligibility for a state pension, provided that the individual wishing to claim the credits did not have a valid election in place to pay reduced NICs. This could be very valuable where the claimant has not yet reached the maximum number of years required for a full state pension; or they could help a family member qualify for some state pension where they had not met the minimum number of qualifying years for a state pension.
This can only help if all of the following conditions are satisfied for the year for which it is intended to transfer the NIC credits:
- has not already reached state retirement age;
- looks after a child or children under the age of 12 – although this is perhaps likely to be while the child or children’s parent or main carer is working, the law does not specifically state that the care provided has to directly relate to working;
- does not already have a qualifying year in their own right through their own contributions or NIC credits;
- is ordinarily resident in the UK;
The parent (or carer):
- does not need the NIC credits from their child benefit claim for their own NIC record.
Both the family member and the parent (or carer):
- make a joint claim at the relevant time (see below).
How do I know that the parent (or carer) does not need the NIC credits?
The simplest way is to check the National Insurance record of the parent or carer. They can only do this after the end of the tax year and the record is not likely to be fully up to date until October following the end of the tax year. This means that from October 2020, you should be able to make a request for the tax year 2019/20.
If you want to think about this now, for the 2020/21 tax year (which ends on 5 April 2021), you can get an indication by considering their pay from working.
Employees start paying NIC at a rate of 0% once they earn in excess of £120 per week; and pay at the rate of 9% once they earn in excess of £183 per week. Higher earners with earnings in excess of £962 per week pay NIC at 2% on earnings in excess of that amount. Provided the children’s parents (or carers) earn enough over the year, they will make up a ‘qualifying year’ towards their state pension. Any weeks when they earn less than £120 are excluded, but in order to get a qualifying year they need to earn only £6,240. That figure excludes any earnings over £962 in a single week. (All of these figures are for the 2020/21 tax year.)
For the self-employed, provided that they pay Class 2 NIC for the whole year, that will give the parents (or carers) a qualifying year towards their state pension.
How and when do we claim?
Both the person giving up the credits and the person claiming them need to complete and sign the claim form CA9176. As noted above, this can usually be actioned from October following the end of the relevant tax year – so October 2020 for the tax year 2019/20.
Claims can be processed for as far back as the tax year 2011/12, so it is well worth making sure all relevant credits are claimed.
If childcare arrangements have switched from one family member to another, as a result of coronavirus measures (or indeed any other reason), it might be that more than one application is needed for a tax year. As credits are transferable based on weeks rather than the year as a whole, one family member might be able to claim the credits for some weeks, and another could claim them for other weeks.
What other information may be useful to us?
It is the person who has claimed the child benefit who may be able to give up the NIC credits. This is often the mother, but may not be.
Other people who might claim the credits include the partner of the child benefit claimant. They would claim on form CF411A.
There is only one set of NIC credits to be transferred so if more than one person is eligible to claim, they need to agree who will claim.
You can read more about Specified Adult Childcare credits on GOV.UK.