⚠️ Please note: we are currently working on updating our tax guidance for 2020/21
across the LITRG website
What are Adult Specified Childcare Credits?
Many people look after their grandchildren to allow the children’s parents (or carers) to go out and work. This can mean that the grandparents are not building up entitlement to the state pension.
Grandparents are probably the biggest group of such ‘family carers’ so we refer to them here. But other adult relatives such as an aunt or uncle can also make claims to Adult Specified Childcare Credits to increase their future state pension
What are Adult Specified Childcare credits?
These are National Insurance credits that can be used to increase or even enable entitlement to the state pension. They arise where the child’s parent (or main carer) does not need the National Insurance credits arising from their claim to Child Benefit.
Normally this is because the parent (or carer) is working and are 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. But 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.
If you have not claimed child benefit at all – whether because of the High Income Child Benefit Charge or for some other reason – then please note you can only backdate a claim for child benefit for three months. See GOV.UK for details of how to claim.
How can this help the grandparents?
Where the parents (or carers) receive 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 they will have ‘spare’ credits (Specified Adult Childcare credits). These can be transferred to a relative who looks after the child to allow the parent (or carer) to work.
Those credits can count towards the grandparent’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. These credits could be very valuable where the grandparent has not yet reached the maximum number of years required for a full state pension; or they could help a grandparent qualify for some state pension where they had not met the minimum number of qualifying years for a state pension.
For individuals reaching state pension age on or after 6 April 2016, the maximum number of years required for a full state pension is 35. The minimum number of years required for a partial state pension is 10.
Who can claim these credits?
Any relative can claim them but all of the following conditions must be satisfied for the year for which it is intended to transfer the NIC credits:
The grandparent (or other relative):
- has not already reached state retirement age;
- looks after a child or children under the age of 12 while the child or children’s parent or main carer is 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 grandparent 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 you would have to wait until October 2021 before you made the request for the tax year 2020/21. However, you could check now for the 2018/19 tax year and earlier years.
In the meantime, 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 (2020/21) in a single employment; and pay at the rate of 9% once they earn in excess of £183 per week (2020/21) in that employment. Higher earners with earnings in excess of £962 per week from a single employment 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 (2020/21). That figure excludes any earnings over £962 in a single week.
If you have two or more employments at the same time – for example, you have two part-time jobs – then you must consider the earnings from each of them separately against the above thresholds. For example, if you earn £100 a week from each of two employments, then you will not pay NIC on either employment and the earnings will not count towards entitlement towards state benefits, even though you earn more than £120 a week in total across both employments.
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 cannot be actioned until at least October following the end of the relevant tax year – so October 2020 for the tax year 2019/20, and October 2021 for the tax year 2020/21 but you could make the claim now for earlier years.
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.
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 normally 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.
You can read more generally about National Insurance on our dedicated page What is National Insurance?.