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4 Potential issues that may impact on kinship carers' benefit claims.
There are a number of reasons why kinship carers may potentially have difficulties with accessing the benefits system when they take over the responsibility for a child. These include:
- understanding the benefits system;
- proving 'responsibility for a child';
- time taken to administer claims;
- need to report all changes of circumstance;
- intermittent care responsibilities or shared care;
- possible impact on the benefit entitlement of the child's parent;
- mortgage payments for owner occupiers;
- complexity of the effect of payments for child maintenance (by the local authority or child's parents) on benefits;
- consideration of options for low income kinship carers;
- income of kinship carer is too high for means tested benefit.
The nature of the transfer of responsibility for a child in these cases can exacerbate the problem. For example, the transfers may be unplanned; they may involve the breakdown of the relationship between the new kinship carer and the parent; and the arrangements may alter on a fairly regular basis.
These issues are explored further below.
4.1 Understanding the benefits system
The benefits system is extremely complex, even when described in brief as in section 2 of this report. There are a large number of criteria for each benefit, to ensure that a claimant is eligible, as well as income rules for means tested benefits. This level of complexity is extremely bewildering, particularly for those with little or no experience of the benefits system. The interaction between benefits is also complex, and requires a considerable knowledge to work out what the most appropriate options may be.
Someone who becomes a kinship carer might possibly become eligible for:
- child benefit;
- child tax credit;
- working tax credit;
- housing benefit;
- council tax benefit;
- carer's allowance for looking after a child receiving the relevant level of DLA.
They would need to become an appointee for the child's DLA if relevant. Case study 7 illustrates the number of benefits that a kinship carer for a child with a disability may be able to claim. It also highlights the increase in income that can result.
Each of these benefits may be administered by a different office (as identified in table 2.3), and may require a different claim to be made.( However, where a child already has entitlement to DLA then no new claim form is needed (because the child is the claimant). The new guardian/carer needs to let DCS know that they are now caring for the child and that payment of DLA should be made to them as the new appointee.)
Some claimants may find the process of claiming benefits challenging. CAS find that many claimants have difficulty in completing the forms. They may be required to provide:
- proof of identity;
- proof of income (including savings, earnings, pensions, other benefits);
- proof of responsibility for a child;
- medical details (for disability benefits);
- proof of hours worked.
In most circumstances, a benefit will be paid from the date of the claim. Rules for which benefits can be backdated, and in what circumstances, are also complex, and vary depending on the benefit. Therefore a delay in making a claim can cause a considerable loss in benefit.
The interaction between some benefits also adds to the complexity. For example:
- receipt of disability benefits can increase the level of means tested benefits that is payable;
- only one earnings replacement benefit can be paid to an individual, even if they are eligible for more than one;
- this eligibility, however, can have a knock on effect on some means tested benefits.
4.2 Proving responsibility for a child
As identified in section 2.1, it is necessary to prove that a claimant has responsibility for a child in order to receive child benefit. In general, the default claimant will be the mother of the child. If responsibility for that child is then taken by a kinship carer they will need to prove that they are an eligible claimant, and that they have priority over any other potential claimant. This is only straightforward if all eligible parties agree who has priority. If a decision maker at HMRC has to make a decision, this will require additional proof, and also will take more time. There is no right of appeal to an independent body once this decision is made.
Once a decision is taken about the person who will receive child benefit, other agencies (apart from child tax credit office) will accept this claimant as being the person responsible for that child. Child tax credit decision makers will not necessarily agree.
In case studies 1 - 7, each claimant / claimants would need to satisfy both offices in HMRC that they were responsible for the child or children.
Child benefit continues to be paid to the original claimant for 3 weeks after a new claim. If payment has already been made to the original claimant, the new claimant, even if entitled to the money, will often not receive it. Therefore any delay in claim, or decision making on who will receive child benefit, can cause a loss in actual payment.
There may be a number of reasons why a kinship carer may not wish to make the claim of priority, not least the impact on the benefit status of the parent - see section 4.6.
4.3 Administrative delays
The processing of even straightforward benefit claim applications can take a varying amount of time, some taking in excess of 6-8 weeks. Therefore even if a kinship carer makes a claim for benefit immediately on taking responsibility for the child, and there are no disputes about this, there will be delays before any money due is paid. Although benefit payment will be backdated to the date of the claim, there is likely to be a period where no actual money is being paid to the kinship carer, which could lead to hardship depending on the circumstances of the kinship carer.
In practice, if the situation is not straightforward, there could be a delay of several months before the benefit payments are made in full.
4.4 Need to report all changes in circumstances
Means tested benefits require that all changes in circumstances must be reported to the relevant office for that benefit immediately. In some cases the absence of a child will remove an entitlement to a benefit (not only child benefit and child tax credit). Overpayments of benefits and tax credits can then follow, which will have to be repaid, with the potential hardship that would ensue. Overpayment of housing benefit or reduction of housing benefit entitlement can result in rent arrears, and in some cases could lead to eviction once the due process has occurred.
This can lead to confusion and considerable hardship for claimants, who may not understand which changes of circumstance need to be reported, and to which offices. As detailed in 2.2.1, a penalty can also be added to an overpayment by the tax credit office in certain circumstances.
4.5 Intermittent care responsibilities or shared care
If the care of a child is shared between different parties, the situation is even more complex. All the factors discussed above will be exacerbated, as each time the responsibility for the care changes, new benefit claims would need to be made (except in the case of DLA). This will impact on both the kinship carer and the parent. Both will need to maintain a home suitable for the child, but would be faced with losing benefit entitlement each time the child moves away. If the child stays with the kinship carer for less than 56 days within a 16 week period, they would not have an entitlement to child benefit, with the knock on impact for other benefits. For child tax credit, the claim would move from one person to another depending on which person fulfilled the 'main responsibility test'.
4.6 Possible impact on the benefit entitlement of the child's parent
In the same way that responsibility for a child can potentially increase the number and amount of benefits payable to a kinship carer, the loss of that responsibility can cause the parent to lose the same benefits. The examples below show how this may occur:
- a parent on income support losing the responsibility for a child would have to sign on as actively seeking work, and claim income-based jobseeker's allowance instead of income support (unless they qualify for income support through another route). They would no longer be eligible for child benefit and child tax credit;
- a parent on a low income working between 16 and 30 hours per week with no disability would lose not only child benefit and child tax credit but also an entitlement to claim working tax credit. This parent could also lose out on any housing benefit and council tax benefit that they might have been receiving. The parent might also lose the health benefits that would have been passported due to receipt of working and child tax credits.
It is therefore possible that a parent will be unwilling to concede that responsibility for a child has passed to another person. The member of family taking over the responsibility for the child may also be unwilling to force the issue, or indeed claim the benefits to the detriment of the child's parent.
4.7 Mortgages for owner occupiers
Owner occupiers are only able to obtain assistance with their mortgage if they are entitled to:
- income support; or
- income-based JSA; or
- pension credit.
They will only be able to obtain assistance with the interest they pay, and then only using the interest rate specified by the DWP. Interest payments increase the perceived need of the household, but will still be compared with income to calculate if any benefit is payable. Figure 4.1 illustrates this. The diagram presumes that both sets of claimants have identical circumstances apart from their housing status - one couple rent their home whilst the other is an owner occupier with a mortgage.
Fig 4.1 Comparison of need with income, including mortgage interest and with no housing costs.
If claimant's income is too high, then there will be no entitlement to benefit whether the need includes mortgage interest or not.
Mortgage interest can only be added into the need for those under 60 after waiting times. This can be as long as 39 weeks before assistance with mortgage payments applies.
4.8 Effects of payment of maintenance for care of a child
A payment of maintenance for the child may be made by the local authority or the absent parent(s).
4.8.1 Fostering allowance made by local authority
The situation with payments made by a local authority is extremely confusing. Payments may be based on three different sections of legislation about the care of children. The following payments may be made:
- payments under section 26 of the Children (Scotland) Act 1995 - for 'looked after' children (this means that the local authority has compulsory care responsibility for the child). Fostering allowances are paid from this budget to approved foster carers. In some cases, kinship carers may be paid fostering allowances.
- payments under section 22 of the Children (Scotland) Act 1995 - enabling the local authority to discharge their duty to provide advice, guidance and assistance in kind or, exceptionally, in cash to a child in need, or the family of that child. These tend not to be regular payments, but one off amounts to cover expenses. However, in some cases they are given on a regular basis.
- payments under section 50 of the Children Act 1975 - authorising the local authority to pay anyone who is looking after a child who is not the parent.
Section 26 payments are specifically mentioned in the child benefit and child tax credit regulations. If a kinship carer has a section 26 payment made to them by the local authority for care and maintenance of a child, they do not count as responsible for that child for benefit purposes. That is, they will not receive child benefit, child tax credit for that child, or consideration of that child when looking at the household for housing benefit and council tax benefit.
However, any income they receive as fostering allowance will not be considered as income when looking at the benefits the kinship carer may be entitled to in their own right. Case study 8 illustrates the effect of a section 26 payment.
If a claimant is in receipt of child benefit for a child, other regular payments to assist with that child's maintenance from the local authority are disregarded as income for tax credits, income support and income-based JSA. They are counted as income for housing benefit and council tax benefit, with £15 disregarded.
There is, however, confusion about how the non section 26 payments are treated for child benefit and child tax credit.
4.8.2 Child maintenance paid by a parent
If child maintenance is received from the absent parent(s), the kinship carer will be able to receive child benefit and child tax credit (if they qualify based on income) for that child. The child will be considered part of the household for housing benefit and council tax benefit purposes. However, the amount of child maintenance paid will be counted as income, with the following disregards:
- for income support or income-based jobseeker's allowance, the first £10 per week is disregarded;
- for housing benefit and council tax benefit, the first £15 is disregarded;
- all child maintenance is disregarded for child and working tax credit, and for pension credit.
Therefore, depending on the circumstances of the kinship carer, they may benefit by only £10 if child maintenance is paid. This is illustrated in case study 1b. If this client had been two years older and in receipt of pension credit instead of income support, the child maintenance would have been disregarded as income, and she would have been £30 better off. A kinship carer who is not in receipt of means tested benefits would keep all of the child maintenance.
4.9 Consideration of options for low income kinship carers
Case study 6 illustrates a potential dilemma for a kinship carer on a low income. This woman works part-time, but once she has responsibility for two children there is only a small financial gain if she continues working.. In order to make an informed decision, she would need advice on her entitlement to benefits, what the choices are and what they mean for her financially. This advice is provided by Citizens Advice Bureaux, some local authorities and some other voluntary agencies, but a kinship carer would need to be aware that these agencies are able to provide such advice.
For kinship carers who work part-time, the number of hours they work is crucial in determining which benefit they can claim. If they do not understand the system, a claim could lapse and there could be a gap between a future claim with a resulting loss of money. There could also be the possibility of an overpayment of the old benefit.
Kinship carers on income-based JSA may also not realise that they could claim income support instead when they become responsible for a child under 16.
4.10 Income of kinship carer is too high for means tested benefits
Some kinship carers will have an income that is too high for them to be entitled to means tested benefits (with the exception of the family element of child tax credit). They will therefore only be entitled to child benefit and £545 per year child tax credit.
Case studies 2 (a couple where the male partner has 'average earnings') and 5 are examples of kinship carers whose income is too high for them to claim means tested benefits.
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