Is carers allowance taxable when for a child?

[EmmaJW1976]

Hi

I am really confused about this.

Since I gave up work I get carers allowance as I get middle rate carers DLA for my DS1.

I am doing a few bits of work from home, nowhere near earning enough to pay tax on, but if I add the carers allowance on for the whole year then maybe I would just about have to pay tax.

Can someone help please??!!!

Thanks.

I thought CA was a taxable benefit. DLA isn't.

Message withdrawn

When did you give up work? If it was since April 2007 your tax office needs to know you are getting CA. You are also supposed to tell them within 3 months of taking up self employment or risk a fine.

Having said that, if the combined CA and self employed income takes you only just into the tax bracket you'll only be paying 10%.

Tax thresholds here

Thanks - I only just gave up work and have only just received my first CA.

I haven't been paid for any SE work yet, but I know the bit about registering within 3 months.

Coven - I have looked at the tables, thanks.
So I can earn up to £5225 without paying any tax? So what does the £0-2230 mean? Is that on top of the £5225?

See, I'm SO confused!!

I would phone your local Inland Revenue office and discuss it with them, as you don't want to get a whopping tax bill in 3 years time.

CA is taxable - you can earn up to 84 pounds a week after certain deductions before it stops, but it will be added to any income for tax purposes, including child tax credit.

Thanks Fio - will have a good read of that. This is all new to me because I have always worked.

I have told the tax credits office about the CA, but they haven't had to reduce my payments as I was previously earning more than what the CA is a month.

I won't be earning more than about £50 a week so won't go over threshold of CA.

Maybe it would be easier just not to earn...

Well I have just called the newly self-employed helpline at the Inland Revenue and they said that I am actually still classed as 'employed' (because I have to do what I'm told, I don't risk my old money, I can't employ people at my expense etc etc).

So that clears that up!

Thanks for your help..

OWN money I mean, not OLD money, LOL

Emma you can earn up to £5225 without paying tax, then the first £2230 over that (ie up to £7455) is 10%. So if your S/E and CA came to £6000 for the year you'd pay tax on £775 at 10% = £7.75 HTH

If you leave work midway through a tax year you would ordinarily be entitled to a tax refund, but obviously the amount you get in CA needs to be taken into account. It's not just the tax credits people you need to tell but your local tax office.

Sidge, tax credits aren't taxable.... when HMRC looks at your income for tax purposes they will only want to know how much you've earned (employed and self employed) and how much you've had in taxable benefits.

Coven - I will call my tax office now.
Thank you.

Covenhope, that's interesting because I was told I would be taxed on CA as it is "lumped in" with any income. So if I didn't earn then obviously I wouldn't pay any tax as CA is below the taxable level. But if I earned AND received CA I would be taxed on the total as if it were normal income. Was I misinformed? (Hope so!)

No Sidge, that is right, unfortunately!

If your income and CA come to more than £5225 combined then you have to pay tax at 10% and if combined it comes to more than £7455 then you'd pay at the standard rate.

Thanks for clarifying that Coven - mind you I've just realised that if I was earning enough enough to pay tax then they would stop my CA anyway - doh!

I have been trying to work out whether to go back to work or not but it's so complicated.

You're right it is so confusing, much easier when I was at work and I just didn't get anything extra!

I've spoken to the CA, inland revenue etc and as long as I earn around £80 a week at most I'm fine (which I fully intend to do to save things getting complicated!).

By the way, for tax purposes it's roughly £90-100 a week including CA but for CA purposes it no more than £87.

Hmm....confusing....maybe I'll just watch lots of daytime telly

Hi everyone - sorry to muscle in on this thread - I have just been awarded carer's allowance and don't work at all - however I have some savings from dh's family and dh reckons I will get about £1000 a year interest. So in effect I'll be just over the £5225 limit - so does anyone know what I do? Do have to self-declare or something? It's all so complicated but I really don't want to be landed with a big bill somewhere down the line.

No idea. My CA was paid to me and I didn't pay tax on it even when DH was working. They counted it into my tax allowance.
No idea about savings although given that CA is a paltry 7p a hour for care 24/7 you shouldn't have to be taxed on it either.

Jek - they don't take into account DH earnings at all.

If you get £1k interest personally a year and then carers allowance at £196 a month, that doesn't take you over the £5225 threshold so you should be fine.

Thank you - I'm fairly certain we won't go over the limit but dh is flapping a bit so I'll leave it up to him to do the figures!