State Pension payments boosted by £328 with one HMRC claim | Personal Finance | Finance
State Pensioners with families can boost their payments by up to £328 with one claim to HM Revenue and Customs (HMRC).
Pensioners who help to look after their grandchildren while their parents are working may not realise that they can claim National Insurance credits from HMRC to boost the amount they get in their State Pension. If you look after a child aged under 12 and their parent or main carer doesn’t need the credits themselves, you can apply to claim Specified Adult Childcare Credits, which essentially transfers the credits to you instead.
These credits help to stop gaps in your National Insurance record and you’ll get Class 3 National Insurance credit for each week or part week you provided care for the child.
HMRC explains: “There is only one credit available for each Child Benefit claim, no matter how many children are on the claim itself.
“For example, if 2 grandparents provided care for their daughter’s 2 children, there is only one credit available for transfer. The Child Benefit recipient must decide who should have the credit.
“If the grandparents provided care for their daughter’s child and their son’s child, there are likely to be 2 Child Benefit recipients. This means 2 credits are available for transfer.”
National Insurance credits are important as you need at least 10 years’ worth in order to qualify for the State Pension, and 35 years’ worth to get the full amount.
The full rate of the new State Pension is currently £230.25 per week, but the amount you get may be different depending on the number of National Insurance qualifying years you have, if you were contracted out before 2016, or if you paid into the Additional State Pension before 2016.
Each qualifying year after April 6, 2016 added to your National Insurance record increases your State Pension amount up to the full rate.
According to wealth management company Quilter, Specified Adult Childcare credits could boost State Pension payments by £328 annually, so over the course of a typical retirement – which is around 20 years – this would amount to £6,560 of additional income. Of course, this amount could be even higher as the State Pension rates increase each year.
Quilter said: “These credits can make someone over £6,000 better off over the course of a typical retirement. Specified Adult Childcare credits provide a valuable opportunity for grandparents or other family members caring for a child under 12.
“When the child’s parent or primary carer is employed or self-employed and already paying National Insurance contributions (NICs) through their work, they may not require the additional NICs they accrue from child benefit claims.
“These ‘extra’ credits can then be transferred to the child’s caregiver, potentially increasing their state pension by £328 annually. Over a standard retirement, this could translate to a financial benefit of over £6,000.”
HMRC says you can apply for the credits providing:
- you are an eligible family member, who provided care for a child aged under 12
- you were aged 16 years and over, but under State Pension age, when you provided care for the child
- you are ordinarily resident in the UK, but not the Channel Islands or the Isle of Man
- the child’s parent or main carer has claimed Child Benefit, but does not need the credits themselves
- the child’s parent or main carer agrees to your application
The child’s parent or main carer must then countersign the form to confirm they agree that, for the period stated, you provided care for their child and can have the credits.
You must wait until October 31 after the end of the tax year you want to apply because HMRC needs to check if the parent or main carer already has a qualifying year for National Insurance purposes.
