4. Benefits and tax credits if a child is looked after

CPAG

Non-means-tested benefits

Tax credits

National insurance credits

This section applies if you are a kinship carer and you are caring for a child who is looked after by the local authority. This will normally be because:1s17(6) C(S)A 1995

•of a supervision order or interim supervision order under the Children’s Hearings (Scotland) Act 2011; or

•the local authority has placed the child with you under section 25 of the Children (Scotland) Act 1995; or

•there is a permanence order in respect of the child under Part II of the Adoption and Children (Scotland) Act 2007.

It can be important to know what type of payment the local authority is making and what it is for (see here). Ask your local authority to provide details in writing of the type of payment, in particular what legal power it is using to make the payment, and what it is for.

1 s17(6) C(S)A 1995 »

Child benefit and guardian’s allowance

If you are caring for a looked-after child, you should be entitled to child benefit.1Reg 16(1) CB Regs The exception to this is if the local authority is making payments to you under regulation 33 of the Looked After Children (Scotland) Regulations 2009 (this may be referred to as a payment under section 110 of the Adoption and Children (Scotland) Act 2007) and this payment is for either accommodation or maintenance. In this situation, you are not entitled to child benefit.2Reg 16(3) CB Regs

To be entitled to guardian’s allowance, you must be entitled to, or treated as being entitled to, child benefit3ss77 and 122(5) SSCBA 1992 and satisfy the other conditions of entitlement for guardian’s allowance (see here).

1 Reg 16(1) CB Regs »

2 Reg 16(3) CB Regs »

3 ss77 and 122(5) SSCBA 1992 »

Means-tested benefits

Universal credit

If you are a kinship carer of a looked-after child, your universal credit (UC) does not include any child element, including the disabled child element, for the child unless you have legal parental responsibilities for the child.1Regs 4 and 4A UC Regs Most kinship carers of looked-after children do not have legal parental rights and therefore do not get a child element for the children they care for.2If there is a permanence order in place in respect of the child, the child is looked after by the local authority but you may, as a kinship carer, have parental rights and responsibilities vested in you. In this situation, your UC may include the child element for the child. However, the UC rules appear to still prevent this because they excluded ‘foster carers’ from getting the child element and the definition of foster carer includes Scottish kinship carers of looked-after children (reg 2 UC Regs). It is unclear whether this is the DWP’s intention.

A ‘two-child limit’ was introduced on 6 April 2017 (see here). There are some exemptions from this rule, including a child in kinship care where you have parental rights or responsibilities for her/him as a result of a permanence order or if you get guardian’s allowance in respect of the child. S/he continues to be exempt after her/his 16th birthday, providing you are still responsible for her/him.3Reg 24B(2A) and Sch 12 para 4(2) UC Regs

UC includes a housing costs element. If you live in rented accommodation, the amount is based on how many rooms you need (the ‘size criteria’). A looked-after child in kinship care for whom you do not get a child element is not allocated a room in the size criteria. However, kinship carers of looked-after children are allowed one extra bedroom in the size criteria.4Reg 2 and Sch 4 paras 9 and 12 UC Regs A looked-after child in kinship care for whom you do not get a child element does not count as a dependent child for the purposes of the work allowance (see here) or the childcare costs element (see here).

If you are caring for a looked-after child aged under one and you are single, or you are in a couple and are nominated as the main carer, you are not subject to any work-related requirements (see here).5Reg 89(1)(f) UC Regs If you are caring for a looked-after child aged between one and 16 and you are single, or you are in a couple and are nominated as the main carer, you are subject to the work-focused interview-only requirement (see here). This can extend beyond the child’s 16th birthday if s/he has care needs which would make it unreasonable for you to meet the work search or work availability requirements, even if these were limited.6Reg 91(2)(a) and (b) UC Regs

If you are in a couple and your partner is the main nominated carer, you can be subject to the work-focused interview-only requirement if you and your partner are caring for a child or qualifying young person who has care needs which would make it unreasonable for either of you to meet the work search or work availability requirements, even if these were limited.7Reg 91(2)(c) UC Regs

Local authority payments are disregarded as income for UC.8Reg 66 UC Regs

1 Regs 4 and 4A UC Regs »

2 If there is a permanence order in place in respect of the child, the child is looked after by the local authority but you may, as a kinship carer, have parental rights and responsibilities vested in you. In this situation, your UC may include the child element for the child. However, the UC rules appear to still prevent this because they excluded ‘foster carers’ from getting the child element and the definition of foster carer includes Scottish kinship carers of looked-after children (reg 2 UC Regs). It is unclear whether this is the DWP’s intention. »

3 Reg 24B(2A) and Sch 12 para 4(2) UC Regs »

4 Reg 2 and Sch 4 paras 9 and 12 UC Regs »

5 Reg 89(1)(f) UC Regs »

6 Reg 91(2)(a) and (b) UC Regs »

7 Reg 91(2)(c) UC Regs »

8 Reg 66 UC Regs »

Income support

Note: if you are not already getting income support (IS), you cannot now claim it because of the introduction of UC.

If you are a kinship carer, your IS may be affected in the following ways.

•If you are caring for a child aged under 16 and you do not have a partner, you can get IS on the basis of being a kinship carer of a looked-after child.1Sch 1B para 2 IS Regs

•If you have been getting IS since before 6 April 2004 and you have a dependent child, you may still be getting amounts in your IS for her/him. This is now extremely unusual and only the case if you have not claimed child tax credit (CTC). See here for more information. If this applies to you because you get IS for other children in the family and you now want to include the child who has come to live with you, s/he must be considered to be part of your household (see here).

Part of your household

Sometimes, even though a child lives with someone, s/he is not treated as part of her/his household for IS purposes. It is possible that the Department for Work and Pensions (DWP) may not treat the child for whom you care as part of your household for IS purposes. This is because the rules that affect kinship carers are not clear.2Reg 16 IS Regs sets out circumstances in which a person is to be treated as not being a member of the household. Arguably, your situation does not fall within this because the arrangement does not amount to the child being ‘boarded out under a relevant enactment’. If the DWP decides the child is not part of your household for IS purposes and you lose benefit as a result, seek advice.

The effect of local authority payments

The local authority may be paying you under section 22 of the Children (Scotland) Act 1995, section 50 of the Children Act 1975 or regulation 33 of the Looked After Children (Scotland) Regulations 2009.

Any payment the local authority makes should be disregarded in full,3Sch 9 paras 25(1)(ba), 26 and 28(1)(c) IS Regs; Vol 5 Chap 28 para 28378 DMG except if you are still getting amounts in your IS for a child. In this case, Section 50 payments count as income up to the amount equal to the child’s personal allowance and any disabled child premium for that child.4Sch 9 para 25 IS Regs, unamended by SS(WTCCTC)(CA) Regs for claimants still receiving amounts for children in IS

1 Sch 1B para 2 IS Regs »

2 Reg 16 IS Regs sets out circumstances in which a person is to be treated as not being a member of the household. Arguably, your situation does not fall within this because the arrangement does not amount to the child being ‘boarded out under a relevant enactment’. »

3 Sch 9 paras 25(1)(ba), 26 and 28(1)(c) IS Regs; Vol 5 Chap 28 para 28378 DMG »

4 Sch 9 para 25 IS Regs, unamended by SS(WTCCTC)(CA) Regs for claimants still receiving amounts for children in IS »

Income-related employment and support allowance

You can get income-related employment and support allowance (ESA) if you satisfy the rules in Chapter 1. There are no additional amounts in ESA for dependent children.

The effect of local authority payments

The local authority may be paying you under section 22 of the Children (Scotland) Act 1995, section 50 of the Children Act 1975 or regulation 33 of the Looked After Children (Scotland) Regulations 2009.

Any payment the local authority makes should be disregarded in full.1Sch 8 paras 26(1)(b), 28 and 30(1)(c) ESA Regs; para 51255 DMG Vol 9 Ch 51

1 Sch 8 paras 26(1)(b), 28 and 30(1)(c) ESA Regs; para 51255 DMG Vol 9 Ch 51 »

Jobseeker’s allowance

Note: if you are not already getting income-based jobseeker’s allowance (JSA), you cannot now claim it because of the introduction of universal credit.

If you are a kinship carer, your JSA may be affected in one of two ways.

•If you have been getting JSA since before 6 April 2004 and you have a dependent child, you may still be getting amounts in your JSA for her/him. This is now extremely unusual and only the case if you have not claimed CTC. If this applies to you because you get JSA for other children in the family and you now want to include the child who has come to live with you, s/he must be considered to be a member of your household for JSA purposes (see here).

•Some couples have to make a joint claim for JSA, which means that you both need to claim, ‘sign on’ and look for work. This does not apply if you and your partner are caring for a child.

Part of your household

Sometimes, even though a child lives with someone, s/he is not treated as part of her/his household for JSA purposes. It is possible that the DWP may not treat the child for whom you care as part of your household for JSA. This is because the rules that affect kinship carers in this situation are not clear.1Reg 78 JSA Regs sets out circumstances in which a person is to be treated as not being a member of the household. Arguably, your situation does not fall within this because the arrangement does not amount to the child being ‘boarded out under a relevant Scottish enactment’. If the DWP decides that a child is not part of your household for JSA purposes, and you lose benefit as a result, seek advice.

The effect of local authority payments

The local authority may be paying you under section 22 of the Children (Scotland) Act 1995, section 50 of the Children Act 1975 or regulation 33 of the Looked After Children (Scotland) Regulations 2009.

Any payment the local authority makes should be disregarded in full,2Sch 7 paras 26(1)(ba), 27 and 29(1)(c) JSA Regs; para 28378 DMG Vol 5 Ch28 except if you are still getting amounts in your JSA for a child. In this case, Section 50 payments count as income up to the amount equal to the child’s personal allowance and any disabled child premium for that child.3Sch 7 para 26 JSA Regs, unamended by SS(WTCCTC)(CA) Regs for claimants still receiving amounts for children in JSA

1 Reg 78 JSA Regs sets out circumstances in which a person is to be treated as not being a member of the household. Arguably, your situation does not fall within this because the arrangement does not amount to the child being ‘boarded out under a relevant Scottish enactment’. »

2 Sch 7 paras 26(1)(ba), 27 and 29(1)(c) JSA Regs; para 28378 DMG Vol 5 Ch28 »

3 Sch 7 para 26 JSA Regs, unamended by SS(WTCCTC)(CA) Regs for claimants still receiving amounts for children in JSA »

Pension credit

You can get pension credit (PC) if you satisfy the rules on here. Some PC claimants who are responsible for a child or qualifying young person get an additional amount for her/him in their PC (instead of CTC). You will not get this additional amount for a looked-after child unless you have legal parental responsibilities for the child.1Sch 2A para 4(1) and (3)(b) SPC Regs Most kinship carers of a looked-after child do not have parental rights: the exception is if you have a permanence order when you may also have parental responsibility.

Local authority payments are disregarded as income for PC.2Reg 15 SPC Regs

1 Sch 2A para 4(1) and (3)(b) SPC Regs »

2 Reg 15 SPC Regs »

Housing benefit and council tax reduction

Note: if you are not already getting housing benefit (HB), you are very likely to have to claim UC instead, unless you and your partner, if you have one, are over pension age or you live in certain types of accommodation such as temporary homeless accommodation.

HB and council tax reduction (CTR) may be affected in several ways if you are a kinship carer of a looked-after child.

Housing benefit

The child you care for may not be treated as part of your household/occupying your home for HB purposes, even though s/he lives with you.1Reg 21(3) HB Regs; reg 21(3)(a) HB(SPC) Regs. These regulations state that the child is treated as not being part of your household and not occupying your home where s/he is placed with you under a ‘relevant enactment’. Relevant enactment includes the Children (Scotland) Act 1995, the Adoption and Children (Scotland) Act 2007 and the Children’s Hearings (Scotland) Act 2011. This can affect your HB in a number of ways.

•If the child is not part of your household, your applicable amount does not include amounts for the child. If you are on IS, income-based JSA, income-related ESA or the guarantee credit of PC, you are passported to the maximum amount of HB (see here). However, your HB may still be affected - see the next two bullet points.

•If you live in private rented accommodation and your HB is calculated using the ‘local housing allowance’ (see here), the ‘size criteria’ used to work out your local housing allowance does not include the child(ren) you care for. However, you are allowed one extra room in the size criteria because you are a kinship carer of a looked-after child.2Reg 13D(3A)(b) HB Regs; reg 13D(3A)(b) HB(SPC) Regs

•If you are under pension age and you live in the social rented sector, the child is not included in the ‘size criteria’ and you may be treated as under-occupying your home. This may result in your being subject to an under-occupation penalty (‘bedroom tax’). However, you are allowed one extra room in the size criteria because you are a kinship carer of a looked-after child.3Reg B13(6)(b) HB Regs

If you are struggling to pay your rent because of the HB rules, you should claim a discretionary housing payment (see here).

Council tax reduction

If you are on IS, income-based JSA, income-related ESA or the guarantee credit of PC, you are passported to maximum CTR. If you are not passported to maximum CTR, the amount you get depends on whether the child you care for counts as part of your household for CTR purposes and therefore whether s/he is included in your applicable amount (see here). If you are under pension age and you are caring for a looked-after child, s/he should count as part of your household for CTR.4Reg 7(8)(c) CTR(S) Regs Arguably, this should apply to CTR if you are over pension age.5Reg 11(2)(a) CTR(SPC)(S) Regs. These rules state that a child is not part of your household if s/he is ‘boarded out with you under a relevant enactment’. It is arguable that this should not apply to you. If the local authority decides that the child is not part of your household for CTR purposes and you lose money as a result, seek advice.

The effect of local authority payments

The local authority may be paying you under section 22 of the Children (Scotland) Act 1995, section 50 of the Children Act 1975 or regulation 33 of the Looked After Children (Scotland) Regulations 2009. Any payment the local authority makes should be disregarded in full for HB and CTR.6HB Sch 5 paras 25(1)(ba), 26(a)(ii) and (iii) and 28 HB Regs; reg 29(1) HB(SPC) Regs
CTR Reg 57 CTR(S) Regs; reg 27(1) CTR(SPC)(S) Regs

1 Reg 21(3) HB Regs; reg 21(3)(a) HB(SPC) Regs. These regulations state that the child is treated as not being part of your household and not occupying your home where s/he is placed with you under a ‘relevant enactment’. Relevant enactment includes the Children (Scotland) Act 1995, the Adoption and Children (Scotland) Act 2007 and the Children’s Hearings (Scotland) Act 2011. »

2 Reg 13D(3A)(b) HB Regs; reg 13D(3A)(b) HB(SPC) Regs »

3 Reg B13(6)(b) HB Regs »

4 Reg 7(8)(c) CTR(S) Regs »

5 Reg 11(2)(a) CTR(SPC)(S) Regs. These rules state that a child is not part of your household if s/he is ‘boarded out with you under a relevant enactment’. It is arguable that this should not apply to you. »

6 HB Sch 5 paras 25(1)(ba), 26(a)(ii) and (iii) and 28 HB Regs; reg 29(1) HB(SPC) Regs
CTR Reg 57 CTR(S) Regs; reg 27(1) CTR(SPC)(S) Regs »

Scottish child payment

You can get Scottish child payment for a looked-after child if you satisfy the normal conditions of entitlement, including being responsible for the child (see here).

Non-means-tested benefits

Disability living allowance and child disability payment

The information on disability living allowance and child disability payment (and also personal independence payment, adult disability payment and attendance allowance) on here applies equally to any kinship care arrangement.

Carer’s allowance

The information on carer’s allowance (CA) on here applies equally to any kinship care arrangement.

Tax credits

Note: if you are not already getting tax credits, you are very likely to have to claim UC instead.

Child tax credit

Note: if the local authority payment (kinship care allowance) is not for accommodation or maintenance (usually a Section 22 payment – see here), you should be entitled to CTC for the child providing you satisfy the normal conditions of entitlement.

The ‘two-child limit’ (see here) generally means that you cannot get CTC for a child born on or after 6 April 2017 if you already have child elements included in your CTC for two or more children. If you are a kinship carer and have parental rights or responsibilities for a child as a result of a permanence order, that child is exempt from the ‘two-child limit’. S/he continues to be exempt after her/his 16th birthday providing you are still responsible for her/him.1Regs 7(2A), 9 and 12(f) and (g) CTC Regs This is the only exception to the ‘two-child limit’ which affects kinship carers of looked-after children.

If the child is looked after by the local authority and the local authority is paying towards her/his accommodation and/or maintenance, you cannot get CTC in respect of the child.2Reg 3(1) r4 Case A CTC Regs This is because the tax credit rules prevent you from being treated as responsible for a child if s/he is provided with or placed in accommodation under Part 2 of the Children (Scotland) Act 1995 or under the Children’s Hearings (Scotland) Act 2011, and the cost of the child’s accommodation or maintenance is borne wholly or partly out of public funds.

This rule only applies if the local authority payment is for accommodation or maintenance.

1 Regs 7(2A), 9 and 12(f) and (g) CTC Regs »

2 Reg 3(1) r4 Case A CTC Regs »

Working tax credit

If the child for whom you care is looked after by the local authority and the local authority is paying towards the child’s accommodation and/or maintenance, s/he does not count as a dependent child for working tax credit (WTC) purposes.1Reg 2(2) WTC(EMR) Regs However, being a kinship carer of a looked-after child may help you qualify for WTC.

In order to get WTC, you have to be in ‘qualifying remunerative work’. This means that you are working (either employed or self-employed) for a certain number of hours a week and fall into at least one of five categories (see below). If the local authority makes a payment to you, being a kinship carer of a looked-after child can count as self-employed work for tax credit purposes, except if you have legal parental responsibilities for the child – eg, as a result of a permanence order.2ss803-6 IT(TOI)A 2005; reg 4(1) WTC(EMR) Regs fourth condition; BIM 52755 and 52758 HM Revenue and Customs guidance states that kinship carers should be treated as ‘being in remunerative work’.3para 124100 TCM If you are a kinship carer of a looked-after child and you are refused WTC on the basis that you are not self-employed, seek further advice immediately.

You may be able to get WTC if:4Reg 4 WTC(EMR) Regs

•you are aged at least 25 and work for at least 30 hours a week; or

•you are aged at least 60 and work for at least 16 hours a week; or

•you are a single claimant, you have a dependent child, and you work for at least 16 hours a week. If the local authority is paying you in respect of the child’s accommodation and/or maintenance, the child for whom you care as a kinship carer does not count as dependent for this purpose, but if you have a child of your own, s/he does count; or

•you are a couple, have a dependent child and your combined working hours are at least 24 a week. If the local authority is paying you for the child’s accommodation and/or maintenance, the child for whom you care as a kinship carer does not count as dependent for this purpose, but if you have a child of your own, s/he does count. If you both work, one must work at least 16 hours a week. If only one of you works, you must work at least 24 hours. Note: if you are a couple with a dependent child and the non-working partner is incapacitated, a hospital inpatient, in prison or entitled to CA, you can qualify if you work at least 16 hours a week; or

•you have a disability which puts you at a disadvantage in getting a job, and you work for at least 16 hours a week.

The effect of local authority payments

Under the HMRC tax relief scheme, if you are claiming WTC as a self-employed carer, up to £18,140 a year, plus £375 a week for each child under 11 and £450 a week for each child aged 11 or over, is not liable for tax. Local authority payments below these amounts are ignored as income for tax credit purposes.5Reg 19 Table 6 para 9 TC(DCI) Regs See for more information.

If you claim WTC as a kinship carer, your WTC counts as income for any means-tested benefits you get – eg, HB or CTR.

If you are not claiming tax credits as a self-employed earner, but are getting tax credits anyway (eg, because you are employed or you have other children for whom you can claim CTC), local authority payments are disregarded as income.6Because they are not defined as income under reg 3 TC(DCI) Regs (confirmed for s50 and s22 payments in HMRC email to CPAG, 22 April 2009)

1 Reg 2(2) WTC(EMR) Regs »

2 ss803-6 IT(TOI)A 2005; reg 4(1) WTC(EMR) Regs fourth condition; BIM 52755 and 52758 »

3 para 124100 TCM »

4 Reg 4 WTC(EMR) Regs »

5 Reg 19 Table 6 para 9 TC(DCI) Regs »

6 Because they are not defined as income under reg 3 TC(DCI) Regs (confirmed for s50 and s22 payments in HMRC email to CPAG, 22 April 2009) »

National insurance credits

You are entitled to be credited with class 3 national insurance (NI) contributions for any week in which you are a kinship carer of a looked-after child.1s23A(2) and (3)(b) SSCBA 1992; regs 4 and 9 SS(CCPC) Regs These credits can help you qualify for retirement pension and some other benefits. You must apply to HMRC to be credited with NI contributions.2Reg 9(a) SS(CCPC) Regs Complete Form CF411A (available from ) after the end of the tax year and send it to HMRC with a letter of confirmation from the local authority.

1 s23A(2) and (3)(b) SSCBA 1992; regs 4 and 9 SS(CCPC) Regs »

2 Reg 9(a) SS(CCPC) Regs »

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