The average cost of providing full time childcare in the UK now runs at around £260 per week*1 and this will be more in London. For working adults this cost needs to be funded out of net pay, so take home pay after National Insurance (NI) and Income Tax. Earnings would need to be around £16,000 per year just to pay for this provision.
It is hardly surprising then that increasingly, grandparents are helping out and looking after their grandchildren during the working day. Almost 9 out of 10 grandparents provide care at least once a week and with 1 in 10 helping out on a daily basis*2. Most grandparents will be only too pleased to assist their working children and of course build a long-lasting loving relationship with their grandchildren. However, is there in addition to helping out the family, any financial opportunity that can be taken advantage of?
Specified Adult Childcare credits work by transferring the NI credit attached to Child Benefit from the Child Benefit recipient, usually the parent, to, in our example, the grandparent providing care. If you are caring for grandchildren from both your daughter and your son there are likely to be two NI credits available.
These credits will help build up your NI contributions record as you will receive a Class 3 NI credit for each week or part week you care for your grandchild. This helps you build up entitlement to the State Pension for which you need 35 years’ worth of credits to qualify for the New State Pension (post 6th April 2016).
You can apply for Specified Adult Childcare credits if you are a grandparent caring for a child under 12, are under state pension age (currently age 66) and resident in the UK. In addition, the child’s parent (or main carer) must be entitled to Child Benefit and already has a qualifying year for NI so does not need the credit.
To apply for the credits, you need to complete an application form which requires family details, the child’s details and information on the Child Benefit recipient. The child’s parent agrees to your application by countersigning the form to confirm that you cared for their child for the period stated and that you can have the Class 3 NI credit for the period being claimed.
It is also interesting to know that Specified Adult Childcare credits can be awarded retrospectively, from 6 April 2011.
For many grandparents providing much needed assistance within the family unit this could be an added financial bonus. You will probably find that any additional State Pension entitlement simply tops up “the bank of mum and dad”
If you feel that you would be eligible for this credit the helpline number is 0300 200 3500.
*1https://www.nct.org.uk/life-parent/work-and-childcare/childcare/average-childcare-costs
