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2 Benefits for those with responsibility for children

There are a number of benefits that may be available to those with responsibility for a child. These are:

• Child benefit;
• Child tax credit;
• Disability living allowance ( DLA) if a child has a disability;
• Guardian's allowance.

Responsibility for a child may mean that you are able to protect your entitlement to basic State Pension though Home Responsibilities Protection and to build up additional State Pension.

There may also be an impact on other benefits that kinship carers receive. This will depend on the circumstances, including the income, once the children become part of the household.

2.1 Child Benefit

This benefit is administered by the Child Benefit Office of Her Majesty's Revenue and Customs ( HMRC). It is paid to those who are responsible for a child or qualifying young person (referred to as a child for the purposes of this report). It is paid irrespective of the income of the claimant.

A claimant is deemed responsible for a child if:

• the child lives with them or the person contributes to the cost of supporting the child at a rate of at least the amount of child benefit for that child;

and

• they have priority over other potential claimants - see 2.1.1.

Child benefit is paid at two levels, a higher level for the eldest eligible child and a lower level for each other child.

2.1.1 Responsibility for a child

In order for a child to be considered to be living with a claimant they 'must live in the same house or other residence and also be carrying on there a settled course of daily living'. A child may be absent for 56 days within a 16 week period and still be considered to reside with that person.

Child benefit can only be awarded to one person for a particular child. A claim for child benefit must be made for an award to occur. If more than one eligible person makes a claim, HMRC will decide who has priority. The claimants would take priority as follows:

• person with whom the child resides;
• a wife (where husband and wife live together and are the parents);
• a parent;
• the mother (where parents are unmarried and live together);
• in any other case, a person agreed by those entitled;
• if there is no agreement, a person selected by a decision maker at HMRC - there is no appeal against this decision.

Even if a new claim takes priority over an existing claim, child benefit will continue to be paid to the existing claimant for 3 weeks after the new claim is made. Even if a new claim has priority, child benefit will not usually be paid if it has already been paid for that period to someone else, although there are some exceptions to this rule.

2.1.2 Fostering and adoption allowances

Child benefit is not paid to those who receive an allowance from the local authority towards the cost of the child's accommodation or maintenance, even if they are eligible based on the rules detailed above. The child benefit regulations specifically mention payments made under Section 26 of the Children Scotland Act 1995. There is ambiguity about how other payments may be treated. Section 4.8.1 gives further detail about local authority payments.

2.2 Child tax Credit

Child tax credit is administered by the Tax Credit Office of HMRC. It is a means tested benefit payable to those with responsibility for a child or children, dependent on income.

A maximum child tax credit will be built up for a claimant depending on:

• the number and age of the children;
• any child with disabilities.

This maximum child tax credit will then be compared with the claimant's income, and may be paid:

• in full;
• in part (on a sliding scale); or
• not at all (for higher income claimants).

2.2.1 Responsibility for a child

In order to qualify for child tax credit, the claimant(s) must be responsible for at least one child. To be deemed responsible for a child for child tax credit purposes:

• the child must normally live with the claimant - the 'normally living with you test'; or
• the claimant must have the main responsibility for the child - the 'main responsibility test'. This test is used only if a competing claim for child tax credit is made.

In practice, receipt of child benefit will usually mean the claimant is entitled to child tax credit (unless the claimant's income is too high), but not in every case, as these rules are slightly different. The claimant can appeal if a decision maker decides they are not the person responsible for a child.

An initial claim leads to a decision based on the circumstances in the previous tax year. Payment is made based on this decision, and will continue for the entire year. From November 2006, a claimant must inform HMRC if they cease to be responsible for a child, within three months (one month from April 2007), and may incur a penalty of up to £3,000 if they fail to report such a change. An overpayment of tax credit may result which would need to be repaid.

2.2.2 Fostering and adoption allowances and child maintenance payments

If a fostering/adoption allowance is made by a local authority (based on the same rules as for child benefit), then child tax credit will not be paid for that child. If someone is eligible for child tax credit due to responsibility for a different child, then any fostering allowance is not counted as income for tax credits.

Maintenance from an absent parent is also not counted as income.

2.3 Disability living allowance ( DLA)

DLA is administered by the Disability and Carers Service ( DCS), part of the Department for Work and Pensions ( DWP). DLA is paid for a child who has a severe disability which results in personal care needs and/or mobility difficulties. It does not take income into account. A successful claim for DLA for a child will often be for a fixed period, eg two or three years or until the child is aged 16. The benefit is paid to the person with whom the child lives, called an appointee (a gap of up to 12 weeks away from home will not affect payment of the benefit). If the child ceases to live with the appointee, then the appointee should inform the DWP, who will appoint a new appointee. This will usually be the person that is paid child benefit for that child.

DLA has two components - a care component and a mobility component - and is paid at different rates based on the nature and severity of the disability. In addition to the normal entitlement conditions, children need to prove that they require more assistance than would be usual for a child of their age. Table 2.1 illustrates the figures for 2006-7.

Table 2.1 Rates of DLA for 2006-7 (weekly)

Carer's Allowance may be payable for care of children in receipt of at least the middle rate care component of DLA. This carer would need to comply with the rules for Carer's Allowance, but these do not include responsibility for the child. In theory, Carer's Allowance could be paid to someone other than the primary carer.

2.4 Guardian's allowance

This benefit is administered by the Child Benefit Office of HMRC. It is payable to a person responsible for a child (proved by receipt of child benefit for that child) where both parents have died, or one parent has died and the whereabouts of the other one is unknown. It is £12.50 per week in 2006-7.

2.5 Other benefits and the impact of responsibility for a child

Table 2.2 identifies the possible entitlement to means tested benefits for different groups of people. Their income and circumstances would be taken into account when calculating the amount of benefit they might receive, and in some cases income would be too high to receive any of these benefits. There are other benefits that some adults may receive, but these would be based on their particular circumstances and would not be affected at all by the responsibility for a child.

Table 2.2 Means tested benefits applicable to different groups of people

For new claimants of income support, income-based JSA and pension credit, there will be no impact on the amount of benefit payable due to responsibility for a child.

A single person under 60 responsible for a child under 16 would not need to be actively seeking work, so would qualify for income support rather than income-based jobseeker's allowance. However, the amount paid for both benefits to the same person would be the same. (See section 3, case study 1a for more information on actively seeking work.)

There would, however, be an impact on:

• working tax credit;
• housing benefit;
• council tax benefit.

2.6 Working tax credit

Working tax credit is administered by the Tax Credit Office of HMRC. Responsibility for a child can impact on working tax credit in two ways.

Firstly, someone responsible for a child only needs to work for 16 hours per week before they can make a claim for working tax credit. If they have no such responsibility, they would need to work for 30 hours per week before they could make a claim (unless they are disabled).

Secondly, a childcare element can be considered for working tax credit which will partially cover the cost of childcare with a registered childcare provider. It will only be considered for a single person, or a couple where both work or where one is unable to care for the child due to ill health or disability. The childcare element is added to the maximum working tax credit, and then this is compared with income in order to determine the actual amount of benefit payable. Therefore not all childcare costs are actually covered in all cases.

2.7 Housing benefit and council tax benefit

Housing benefit and council tax benefit are administered by the local authority. When considering the calculation of housing benefit and council tax benefit, the claimant's circumstances are considered. Their 'need' is built up taking into account the people in the household and their specific needs. The addition of children into a household increases this 'need'. If a fostering allowance is paid for a child (based on the same rules as for child benefit), this child would not be considered part of the household and so would not increase the 'need'.

The 'need' is then compared to the claimant's income, and housing benefit and council tax benefit may be paid in full, in part on a sliding scale, or, if the income is too high, not at all. Figure 2.1 illustrates this point.

Figure 2.1 Effect of adding children into a household for housing benefit and council tax benefit.

If the claimant's income is too high, the addition of children into the household will still not entitle them to housing benefit or council tax benefit.

2.8 Additional State Pension

Carers are credited into the Additional State Pension Scheme for each complete tax year they do not work at all, or their earnings are low and they are looking after:

• A child under six and get child benefit for that child; or
• An ill or disabled person and are entitled to Carer's Allowance or qualify for Home Responsibilities Protection

This will increase the amount of overall State Pension they can receive and is payable from pension age.

2.9 Home Responsibilities Protection

Home Responsibilities Protection ( HRP) was introduced in 1978 to assist people who have caring responsibilities, and are either not in paid employment or have low earnings, to maintain their entitlement to basic State Pension. It also helps protect entitlement to bereavement benefits for the carer's spouse or civil partner and, from April 2002, can in some circumstances qualify a person for additional State Pension.

2.9.1 How HRP works

The amount of basic (Category A) State Pension a person is entitled to depends on the number of qualifying years (that is, years covered by National Insurance contributions paid or treated as paid and credits) they have built up during their working life. In order to receive a full basic pension 9/10ths of the working life needs normally to be covered by qualifying years. The working life is from age 16 to State Pension age and is currently 49 years for men and 44 years for women.

HRP reduces the number of qualifying years needed for a full basic State Pension by taking away the tax years for which it is awarded from the total number of years required. However, it cannot at this time reduce that number below 20. The provisions apply equally to men and women.

The current maximum number of HRP years is 24 for men and 19 for women.

2.9.2 Entitlement conditions

HRP is available for complete tax years throughout which a person has been:

• Awarded Child Benefit for a child under 16; or
• Receiving Income Support and not required to be available for work because of substantial caring responsibilities; or
• Regularly engaged for at least 35 hours a week in caring for someone who receives, for a minimum of 48 weeks in the year, Attendance Allowance, Constant Attendance Allowance or the highest or middle rate of the Disability Living Allowance care component; or
• Covered by a combination of these conditions.
• From April 2003, registered as a foster carer.

HRP is awarded automatically where Child Benefit is in payment or the Income Support provision applies. In any other case an application must be made.

2.10 Passported benefits

The receipt of some benefits can act as a passport to other benefits, eg free school meals, health benefits (free prescriptions, free sight tests and dental check ups) and social fund payments. Claimants who become responsible for a child may then be eligible for the elements of child tax credit or working tax credit that act as such a passport.

2.11 Effect of gaining responsibility for a child

A claimant gaining responsibility for a child may become entitled to some or all of the following benefits:

• child benefit;
• child tax credit;
• working tax credit;
• housing benefit;
• council tax credit;
• passported benefits;
• DLA for the child if the child is disabled (and possibly Carer's Allowance for looking after this disabled child).

This will depend on their income and circumstances. They would continue to receive the benefits they were receiving before as well.

The converse of this is also true, and someone losing the responsibility for a child may lose some or all of those benefits.

2.12 Making a benefit claim and challenging a decision

Table 2.3 summarises possible benefits that a person responsible for a child might be able to claim on taking over the care of a child. It indicates the office to which they would need to make the claim, whether they are means tested and also the process for challenging the decision.

Table 2.3 Summary of benefits that may be claimed on gaining responsibility for a child

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