We’re all looking to save money where we can. In our series, Small Change, financial gurus share everyday hacks that soon add up.
The extortionate cost of childcare means more and more grandparents are helping desperate parents look after their little ones – but many don’t know they can earn money for doing so.
Thankfully Money Saving Expert’s Martin Lewis has shared a “little known” financial hack that all grandparents providing free childcare need to know – and it can even be backdated.
In short, if you’re looking after grandchildren aged 11 and under, while their parent works, you can apply to get something called ‘Specified Adult Childcare Credit’.
This basically means you earn credits to top up your National Insurance contributions, therefore boosting your state pension.
As with any free money these days, there are certain eligibility criteria you need to meet – for example, the child’s parent(s) must be eligible for Child Benefit.
But it’s well worth doing, as Lewis explains: “This can add £1,000s to a state pension.”
Here’s what you need to know.
How does it work then?
Specified Adult Childcare credits work by transferring the National Insurance credit attached to Child Benefit from the child’s parent to a family member – like a grandparent, aunt or uncle – who is providing care for a related child under 12.
The parent will have to be eligible and claiming for Child Benefit in order for the grandparents to claim this benefit, though. As the government website explains: if no one has claimed Child Benefit for the child there is no attached NI credit to transfer and Specified Adult Care credits cannot be awarded.
Do you get more credits if you look after more than one child?
It depends. If you’re looking after grandchildren who have different parents, you might be able to get more credits. If you’re looking after two grandchildren from the same parent, you’ll just get one lot of credits.
This is because the credit comes from each Child Benefit recipient – aka the parent – rather than from each child under 12 who you’re caring for.
So, for example, if two grandparents are caring for their daughter’s two children, there is only one credit available for transfer and the Child Benefit recipient must decide who should have the credit.
However, if the grandparents are caring for their daughter’s child and their son’s child, there are likely to be two Child Benefit recipients and therefore two credits available.
How much do you get?
So you don’t get cash paid into your bank, but you do earn credits which help to build up your National Insurance contributions – and in turn, bumps up your state pension.
If you’re eligible and your application goes through, you’ll receive a Class 3 NI credit for each week or part week you cared for the child.
Who is eligible to claim?
You can apply for Specified Adult Childcare credits if:
- you are a grandparent, or other family member caring for a child under 12
- you were over 16, and under state pension age, when you cared for the child
- you are ordinarily resident in the United Kingdom, meaning England, Scotland, Wales and Northern Ireland, but not the Channel Islands or the Isle of Man
- the child’s parent (or main carer) is entitled to Child Benefit and has a qualifying year for National Insurance without needing the parent’s class 3 NI credits which they receive automatically from Child Benefit.
- the child’s parent (or main carer) agrees to your application by countersigning the form to confirm that: you cared for their child for the period stated and you can have the Class 3 NI credit for the period stated.
Who isn’t eligible?
Sadly you can’t apply if you already have a qualifying year of National Insurance – usually because you work or receive other NI credits (you can check your National Insurance record online to see if you have any gaps in contributions).
You also can’t apply if you are receiving Child Benefit for the child or you’re the partner of, and live with, the Child Benefit recipient.
How to claim the credits
You’ll need to fill in an application form and provide certain info such as: your personal details (if you’re a grandparent or other family applying), the child’s details and the period you cared for them, the personal details of the child’s parent who receives Child Benefit and signatures from both you and the parent.
Can you backdate them?
Yes, to a certain degree! Specified Adult Childcare credits can be awarded retrospectively, to 6 April 2011, at the earliest.