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Carer Allowance, 'earned' and 'investment' income - what counts?(14 Posts)
Does anyone understand Carer Allowance and the definition of 'earnings' and 'investment income'? I don't work, I get CA for someone who gets PIP, and have done for several years. Last year I let my house and have income from the rent (I employ an agent to manage the property and an accountant to manage my tax, and a sizable mortgage). I downsized and moved to a flat, and now have the opportunity to move in with my partner and let the flat as well as the house. Both properties I have a part-ownership in, so not making a huge amount of money, but enough to live on. Losing CA would make a big difference and would mean it's probably not viable to hang on to the flat. CA isn't means tested, but nowhere can I find out if getting 2 lots of rent would be 'investment income' or if it's seen as 'earnings' which might stop the CA. I'm not currently paying NI as I don't work at all as I'm a ft carer, it's all declared for tax as well, totally legit. Anyone know what counts as 'investment income' as opposed to 'earnings'? I prefer to be well informed before I contact the CA Unit to discuss it. Should say that since becoming a carer I claim no other benefits, and can't come close to matching half my previous salary.
Rental income is earnings. You also need to speak to hmrc as it must be declared to them even if no tax is due. If you are renting out more than one property they will also seem it to be a business.
Thanks Delilahbucket It's all fully declared as income, I already pay some lower rate tax. What I need to understand is if it's regarded by DWP as earnings from an investment or if it's considered as work. Investments don't count as CA isn't means tested, and I could get CA with £20 mil in the bank if only I was so lucky. Work, understandably, has an upper limit as obviously you can't work many hours and still be available as a Carer, and you can only earn up to about £110 a week from working (after certain deductions) before CA is stopped. I don't work, the person I care for takes up too much of my time, so it's about whether letting property is 'unearned' income from an investment (which is it, just a way of investing my lump sum from retirement in the case of my flat) or if the DWP treat it as if it was earning from work. I don't manage the property, totally hands off, no time to do anything. The DWP say they only count income from 'work' on their website but I don't trust them. DWP are just not clear about how they define it, and I wondered if anyone else had been through this and knew.
It is earned income but I wouldn't have thought you are considered to be working for it. With two properties that may differ however. As previously stated, two or more properties rented out and hmrc consider it a business.
It's not earned income - that related to work (employment or self employment).
Rental is investment income.
But if you want to make sure, call the DWP and speak to them to confirm it before you do anything.
Following as this applies to me too. Well, dividends rather than rental income. what did DWP say OP?
I get CA and the rent from my rental property is considered as investment income so it doesn't count at all. I have notified the DWP of my rental and it went to a decision maker who stated that it wasn't earned income. Agree with a pp that it might be different for two properties as that might be viewed more like a business. You might have to argue it on a case by case basis.
Even if they do consider it to be earned income, if it's only a bit above the £116pw threshold, you could play around with pension payments and any childcare costs to reduce it. I do some p/t work and my wage is higher than £116, but I pay into my pension (they deduct 50% of pension contributions) and have to pay out for childcare, which brings me below £116. It doesn't have to be childcare either, it can be paid care for the person you care for even if they're an adult.
Rental income isn't classed as earnings when you want to pay into a pension. I would like to think that would work in your favour but I don't know if that helps.
Thanks all! I've not had time to call DWP yet but I'll let you know what happens when I do so. I just wish they would make the rules clear, and it's only by chance I found out about this at all as it's not on the website!
When I took in a lodger 2 years ago in my own home I telephoned Carers Allowance and informed them . They
said they would treat it as earnings , the rent was less than £100 a week so I was able to keep Carers Allowance. I did think it was very unfair as a lodger was not classed like this for people who had a normal job, if I had a few paid hours working I would have lost the Carers Allowance as would have been over the earnings limit yet if someone was working in paid employment a lodger would have had no detrimental impact on their financial situation. I still think this is wrong but at the time I did not have any energy to fight it and it did not impact the Carers Allowance in my circumstances. Maybe with many more people struggling financially this area has now been clarified. The lodger was lovely but did not stay long and I could not bear the hassle of finding someone new and dealing with Carers Allowance again.
Not really on point but query re delilahbucket comment that "As previously stated, two or more properties rented out and hmrc consider it a business.". Not sure that is right - I know several people with more than 2 flats they own and rent and they just account for the profit on these as normal income on their annual personal tax returns as they would do other salary. The flats are not taxed as a business, the profit is just that individuals money that they then pay individual's tax on.
I’m in about the same position I was left a house between me and my brother we rent it out he said if we made it a limited company it would be better .i get £350 a month dividend payment from it. Then I split with my partner but agreed to rent the spare room out to him.as he doesn’t work through mental illness I was going to remain his carer as I receive carers allowance .but then he applied for housing benefit and esa to pay me his rent which takes me over the threshold.
I lost my pip recently but losing carers is going to be very difficult financially once the bills are paid. As when I was getting £350 a month dividend from house my brother and I rent plus we pay corporation tax ,account fees which leaves me with that 350 it was under the threshold.
But it seems a unfair system you could have thousands in saving but they just allow you 120 a week as this is the new rate from April 2018.
Now I have to ring them Monday and tell them of course they will stop my carers . So not feeling happy at the moment.
Hi guys, did anyone get anywhere with the DWP ? I have an upcoming compliance meeting and wanted to be forearmed as much as poss. There used to be a reference on their website I'm sure referring to rental income as unearned income. Have found reference on a local council website citing rent as unearned income which I will produce. I don't see how they can differentiate how a property was acquired, a second property is an investment. Once transferred into a limited company it then becomes a business.
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