From next February, amounts for children can be included in pension credit where relevant rules are satisfied, as described here by Simon Osborne.
From 1 February 2019, amendments to the pension credit (PC) rules provide that amounts for children (including ‘qualifying young persons’) can be included in the guarantee credit of PC.1 The basic requirements are:
- the claimant is ‘responsible’ for a child; and
- the claimant does not have an award of (and is not treated as having an award of) a tax credit – ie, child tax credit (CTC) or working tax credit (WTC).
If those basic requirements are satisfied, an ‘additional amount’ is included in the calculation of the claimant’s ‘appropriate minimum guarantee’– ie, the maximum amount of the guarantee credit of PC. The additional amount is £53.34 for each child (£63.84 if born before 6 April 2017), increased by further amounts for disability or severe disability. There is no ‘two-child limit’.
A ‘child’ is, in effect, a person under the age of 16 or someone aged 16 or more but under 20 and who counts as a ‘qualifying young person’.2 The same definition of the latter is used as in the universal credit (UC) regulations.3 In essence, this refers to young persons in approved training, or non-advanced education at school or college (or elsewhere if approved) for an average of over 12 hours per week, until the September following the person’s 19th birthday.
Those getting UC, employment and support allowance, jobseeker’s allowance or income support in their own right cannot count.
A ‘normally living with’ test is used – ie, that a claimant is responsible for a child who ‘normally lives with’ the claimant.4 Where the child ‘normally lives’ with two or more people that are not a couple, only one of them can be regarded as responsible for the child. That is the person who has ‘main responsibility’ for the child. The people involved can nominate which person has main responsibility, but ultimately the Secretary of State can decide.
A claimant is treated as not responsible for a child in the following situations:5
- while the child is being looked after by a local authority (except during planned breaks or when the child is placed with her/his parent or someone with parental responsibility);
- while the child is a prisoner;
- while the child is temporarily absent in Great Britain, if the period of absence is likely to exceed 52 weeks, except in exceptional circumstances;
- where the child is temporarily absent from Great Britain, or is expected to be absent, for more than four weeks (the period can be eight weeks in cases involving the death of a close relative, or 26 weeks in cases involving medical treatment);
- following the death of the child, except for the first eight weeks after the death (or the date of the child’s 20th birthday, if earlier).
Award of tax credit
Awards of either CTC or WTC (or being treated as having an award) prevent entitlement to the additional amount for a child in PC.6
A person is treated as having an award during the tax credit renewal period. Specifically s/he is treated as having an award where s/he was entitled to an award in the previous tax year and either no ‘final notice’ for that year has been issued, or it has been and the date for a renewal claim has not expired or a renewal claim has been made but not decided, or there has been no renewal claim but a final decision for that year has not yet been made.
Retrospective awards of tax credits (ie, following revision, review or appeal) also remove entitlement.
Where an additional amount can be included, the amounts for each child (there is no two-child limit) are as follows:
|Child born before 6 April 2017||£63.84|
|Child born or after 6 April 2017||£53.34|
|Further amount for disability*||£29.02|
|Further amount for severe disability**||£88.34|
* child entitled to disability living allowance (DLA) or personal independence payment (PIP)
** child entitled to high rate DLA care component, enhanced rate PIP daily living component, or certified as severely sight impaired or blind
A wider context
The inclusion of child amounts in PC has a wider context, namely the eventual abolition of CTC and its replacement by UC. But, given that UC is for claimants under PC age, there needs to be support for older people on low incomes with children.
However, although child amounts for PC are included from February 2019, not date has yet been fixed for the abolition of CTC. Hence the need for the rule barring entitlement to the addition in PC for a claimant entitled to tax credits. The Explanatory Memorandum to the amendment regulations described here gives little further clue to exactly what is planned, beyond this statement:7 ‘If the claimant is currently getting Child Tax Credit then that will continue until they have a change of circumstances that ends their award, or until they are migrated to Pension Credit as part of a phased process ahead of the abolition of tax credits.’
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- 1. The amending rules are the State Pension Credit (Additional Amount for Child or Qualifying Young Person) (Amendment) Regulations 2018, SI No.676 (the ‘Amendment Regs’).
- 2. Formally, ‘child’ and ‘qualifying young person’ are distinct, but for ease of use both are included here under ‘child’.
- 3. Reg 4A of the State Pension Credit Regulations 2002 (the ‘PC Regs’), referred to in the new Schedule IIA of those regulations, as inserted by the Amendment Regs.
- 4. para 3 of the new Schedule IIA PC Regs
- 5. paras 4-8 of the new Schedule IIA PC Regs
- 6. Reg 6(11-15) PC Regs, as inserted by the Amendment Regs
- 7. para 7.4 of the Explanatory Memorandum to the Amendment Regs