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‘It takes a village to raise a child’
Recent research shows that around 40% of grandparents in the UK (over the age of 50) provide regular childcare for their grandchildren, with 38% providing care 2-3 times a week.
With the rising cost of childcare and increasingly limited nursery places, it’s likely many more families are relying on their relatives for childcare whilst they go out to work.
However, many of these grandparents are unaware of a benefit that they can claim if looking after children under the age of 12, that can add thousands of pounds to their state pensions.
How do Specified Adult Childcare credits work?
When you pay National Insurance (NI), you build up your entitlement to certain benefits (such as the State Pension) with each year you contribute.
If, at any point, there is a time when you are not making National Insurance contributions, if you are in receipt of certain benefits during this time, it’s possible to earn National Insurance ‘credits’. These credits allow you to continue making a NI contribution without having a gap in your history, meaning that you’ll continue to add to your state pension fund.
Not all benefits entitle you to National Insurance credits. Some of those that do, include:
- Child Benefit
- Universal Credit
- Job Seeker’s Allowance
- Employment Support Allowance
- Maternity Allowance or Statutory Maternity, Adoption Pay and Paternity Allowance
When you receive eligible benefits, in most cases you will automatically be entitled to NI credits. However, if you are working whilst receiving these benefits, as you’re already making a NI contribution through your employment in most cases these credits become redundant, because you cannot double up in contributions.
Specified Adult Childcare credits allow a parent, or main caregiver for a child, to transfer the credits they are entitled to when they claim Child Benefit to a person who is caring for their child(ren) whilst they are working. As long as the parent is in paid employment (or paying National Insurance through self-employment), their own NI contribution won’t be affected, they simply have credits to spare.
Who is eligible?
To be eligible to transfer National Insurance credits, you will need to have received Child Benefit at some point over the last 10 years for the child your family member is taking care of. The child must be under 12 years old.
If you (or your partner) haven’t claimed child benefits, then there is no National Insurance credit to transfer and the person caring for your child won’t be eligible for Specified Adult Childcare credits.
Eligible family members
- Mother or father who does not live with the child, also referred to as a ‘non-resident parent’
- Grandparent, great-grandparent or great-great-grandparents
- Brother or sister (including step relationships)
- Aunt or uncle
- Husband or wife or former husband or wife of anyone listed above
- Civil partner or former civil partner of anyone in 1 to 4
- Partner or former partner of anyone in 1 to 6
- Son or daughter of anyone in 5 to 7
- In respect of the son or daughter of anyone in 4, that person’s:
- Husband or wife or former husband or wife, civil partner or former civil partner, or partner or former partner
The person caring for the child will only be eligible for childcare credits if they are/were doing so before they reached state pension age.
The person you transfer your credits to will receive a Class 3 NI credit for each week or part week they cared for the child.
Credits are linked to the Child Benefit and not the child. So, if a grandparent is taking care of two children who are siblings, they will still only have one credit to claim as these two children will both come under the same Child Benefit claim. If two grandparents are providing childcare, only one of them will be able to claim the credit.
However, if a grandparent is taking care of their son’s child and their daughter’s child, for example, and both parents have received Child Benefits, then the grandparent will be able to claim a credit for each child so long as both parents are working and making their own NI contributions.
How to apply
The family member who is looking after the child will need to make the application for Specified Adult Childcare credits.
They will be asked to provide the following information:
- Personal details of themselves.
- Details of the child.
- When they are providing care.
- Details of the child’s parents or main care provider (the recipient of Child Benefits).
The person making the application for Specified Adult Childcare credits and the parent of the child will need to sign the application for it to be considered for approval.
Childcare credits can be awarded retrospectively back to 2011. If you are claiming for recent tax years, bear in mind that applications won’t be accepted until the following October of the tax year at the earliest. For example, for the 2022-23 tax year, applications can be made from October 2023.
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