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Wednesday, 3 October 2023

Carer's Allowance - effect on other benefits and entitlements

Claiming Carer's Allowance can affect the level of some other benefits and entitlements that you, or the person you care for, receive.

Your benefits

If you receive certain other benefits including the State Pension which are paid at a rate that is the same or more than Carer's Allowance, you may not receive payment of Carer's Allowance but may have what is called an 'underlying entitlement'.

Payment of Carer's Allowance is taken into account in full in the calculation of income-related benefits and Pension Credit.

If you receive Carer's Allowance or have underlying entitlement to it, you will qualify for the carer premium in Income Support and income-based Jobseeker's Allowance, worth up to £32.60 per week.

If you get Housing Benefit or Council Tax Benefit, the local council will include an amount for the carer premium when they work out how much Housing Benefit or Council Tax Benefit you can get.

Claiming Carer's Allowance can also affect the amount of Pension Credit you receive. If you get Pension Credit, the amount used to work out how much you are entitled to is increased by up to £32.60 per week.

Carer's Allowance and National Insurance contributions

For each week you receive Carer's Allowance you will normally get a National Insurance (NI) contribution added to your NI record up to the tax year in which you reach State Pension age (unless you are a woman who has chosen to pay reduced rate NI contributions).

You will also normally be credited with an NI contribution for any week you are entitled to Carer's Allowance but it is not paid because you are also getting Widow's Benefit or Bereavement Benefits at the same or a higher weekly rate.

These NI contributions may help you to qualify for the basic rate of certain other benefits or entitlements in the future.

Additional State Pension

You will automatically build up some additional State Pension for the weeks you are paid Carer’s Allowance. This will also apply to some periods before your Carer’s Allowance begins and ends. Additional State Pension is sometimes called State Second Pension.

From April 2002 to April 2010, you could only build up additional State Pension for each complete tax year that you received Carer's Allowance.

If you don’t get Carer’s Allowance but get other benefits or entitlements at the same or higher rate, you’ll still build up additional State Pension. The additional State Pension will be paid with your basic State Pension when you reach State Pension age.

Caring and your pension

If you are a carer you may be entitled to credits which protect your entitlement to State Pension.

The benefits of the person you care for

If you claim Carer's Allowance, it could affect the amount of benefit the person you care for receives.

The person you care for could lose the severe disability premium in their income-related benefit or the addition for severe disability in their Pension Credit. If you only have an underlying entitlement to Carer's Allowance and are not actually paid it, this will not affect the benefits of the person you care for.

Informing the person you care for you're making a claim

Because your claim for Carer's Allowance may affect the benefits of the person you are caring for, they need to write down on your claim form that:

  • they know you are claiming Carer's Allowance
  • you are caring for them for at least 35 hours a week

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