Carer's Allowance and Tax Free Childcare help please

[ChristmasCrumpet]

Sorry for the AIBU, just didn't know which topic this would best suit.

In order to qualify for CA, you need a net final income of £602.37 p/mth or less.

In order to reach that net final income, you can deduct from your net pay: "childcare costs up the value of 50% of your net income".

So, essentially, the maximum you could have as net pay on your payslip, is £1200, to then deduct childcare costs of £600 (the maximum of 50% of £1200) giving you a final figure of £600 p/mth, which means you're just under the £602.37 for qualifying for CA.

(Still with me lol)

So, I've been looking at a job, that has a net pay of £1200 p/mth. And we have childcare costs of £646 p/mth. All seems good....

But, we also use the tax free childcare scheme, so whilst the £646 is what the nursery invoices us, this is settled via us paying £520 into the tax free childcare scheme and the govt tops us up to £646. If I can only deduct the £520 amount that we physically pay, I won't qualify, I'll annoyingly be £80 over the monthly limit.

Does anyone know, when the CA dept do their calculation, would they use the nursery invoice figure (albeit capped at £600) or the £520 that we physically pay as the deduction from net pay?

I can't find a definite answer anywhere. Even after calling the CA dept. Are there any carers in the same position who know 100%?

Thank you x

Citizens Advice.

Yep, tried them as well.

And Carer's UK.

They didn't know, and all the CA office would say is "that's for an assessor to decide" which is infuriating, because it's not for an assessor to decide which amount to use, there will be a set rule, which the assessors simply apply, but the people who answer the phones at CA could not understand this concept. And no, they can't speak to an assessor. Gaaaaargh!

If you are over the threshold could put any extra into a pension?

That way you will be getting the money later in life and get the carers allowance now

Yes, I could.

But that's not what I need to know the answer too. Everything I search on line just says you can deduct "childcare costs" but then nowhere says which of the two costs you deduct.

Well the cost to you is £520 so you would surely deduct that.

This is my strong assumption also. But I need to find the definitive answer before I take the job, as if it is the £520 then I need to cut the hours slightly which is frustrating.

Your cost

Is this what you're assuming? Or you work for them and know? Or you've been in this situation yourself and know from personal experience? It'll help OP massively if you could say.

From reading the .gov advice, you can include half your pension contributions and any work related costs, like uniform, PC or laptop you purchased for work, mileage allowance, those sorts of things. Is it possible you could include those, to increase your overall costs. My gut feeling would be that it would be the cost to you as HMRC and DWP share info, and will likely know you already claim the tax free childcare payment.

This is benefit specialist territory - not every branch of Citizens Advice will have someone who knows the answer (or how to find it) and I suspect the Carers UK helpline might not know either.

At Citizens Advice we have access to the CPAG Welfare Benefits and Tax Credits handbook (our "benefits bible") and that doesn't have the answer to your question. That means it is unlikely to be specified in the rules or legislation. In that kind of situation you would have to apply for CA (or update your claim) and then if it was rejected (or your claim closed) you would then have to challenge the decision ie go to tribunal.

In the absence of a definitive answer, all you can go on is the educated guess of a benefit specialist. I would guess that when calculating your childcare costs, they will use the actual cost to you, as it seems to me more accurate and logical way of doing it. I know that's not the answer you wanted to hear! You could still take the job and hours but increase your voluntary pension contributions to take your net income under the threshold for CA.

From a practical point of view, if you (as a household) are claiming Universal Credit, whether or not you get CA is not hugely important because it's deducted £ for £. (OTOH, you can keep quite a bit of your earnings.) I assume you're not claiming UC because you didn't mention it, and because you're using TFC. But it might be worth looking into whether you are eligible.

PS If you wanted to ask MNHQ to move the thread, a better place for it is Money Matters.

OP take the job, you can always put a little extra into a pension scheme if you need to because pension comes out of gross pay so brings down net pay. Ask the employer to enroll you into a pension scheme even if you only pay a tiny amount your employer will have to contribute for you too.

Whilst I do genuinely appreciate all the other advice, I do know finances pretty well, I'm a qualified accountant.

I literally just need the answer to this question. There must be someone out there who has CA and also tax free childcare and knows which amount they use.

"I do know finances pretty well, I'm a qualified accountant."

This is why you need to move your post to Money Matters - you'll get responses from people who know what they're talking about.

It's your child care costs ie the cost you pay so the £520 but as others have said you can just pay more into your pension.

Thank you...are you 100% on that? Would you mind sharing your source.

It's an exceedingly niche question. 99.9% of people receiving carers allowance won't be earning 1200, paying £650 in childcare and also using tax free childcare. That's why no one knows the answer.

I suspect that this genuinely might well be the first time that these particular circumstances have occurred, and thus no one at DWP has had to write down the rules yet.

The vast majority of people in receipt of carers allowance don't work. And those that do only earn a very small amount.

And most are on universal credit so the carers allowance is offset £ for £ and isn't counted.

So I suggest you write to DWP carers allowance team. You can always send via your MP for a quicker response and ask for clarification. Then someone will write the rule for the first time

I would also expect that the answer will be the amount you pay, because the government is very keen to not pay twice for the same thing. And it would be argued that the tax free childcare is payment

No, they could be working for a higher amount and also making pension contributions as well as childcare, or a lower net amount with lower childcare.

Whilst they might not have identical figures, it can't be that unique to be a carer and also have children in childcare via TFC.

@mnhq

Could you please move to money matters, thank you