managing finance as a carer
Finance

Is Carer’s Allowance taxable?

5 min read |

If you're a carer and looking to claim Carer’s Allowance, then you may be wondering “Is Carer’s Allowance taxable?”.

This type of allowance can be helpful for carers on a low income and can help support your loved one if they are of pension age.

Benefits for carers over pension age can also help with household and care costs so that loved ones can feel supported at home.

This article will cover the question, ‘Is Carer’s Allowance taxable?’, why it’s worth claiming this benefit, and ways to cover the cost of care.

Here’s a summary of what we’ll cover:

  • Knowing if the Carer’s Allowance is taxable can help you decide if this type of benefit is right for you. 
  • There is no harm in applying as any additional income can still be beneficial for you and your loved one. 
  • This extra income can go towards covering the cost of daily care, and give you access to claim other benefits. 
  • So, even if your Carer’s Allowance is taxable, it’s still worth having a go to see if you’re eligible to claim.
what benefits are available for carers?

Is Carer’s Allowance taxable?

Yes, if you receive a Carer’s Allowance it’s classed as a benefit and is part of your taxable income. 

This means that you’ll have to pay tax on your allowance if you receive a combined income that is over £12,570. 

This can be income from other personal pensions or part-time work, and it’s important to keep an eye on any changes. 

If you receive a Carer’s Allowance, you’ll automatically receive National Insurance credits to cover your NI contributions if you’re unemployed.

carer's allowance questions

Changes in your Carer’s Allowance

If your circumstances change and you stop providing care for someone, then your Carer’s Allowance may be affected.

Be sure to notify the Department of Work and Pensions (DWP) if this happens, as you will then have to pay back some of your allowance if you’re overpaid. 

If Carer’s Allowance isn’t right for you, Disability Living Allowance is another option if your dependent has a disability or long-term condition.

Is it worth claiming Carer’s Allowance?

Yes, it is still worth to try and claim a Carer’s Allowance if you believe you meet the criteria.

Despite Carer’s Allowance being taxable, this means you will get additional income to help support your loved ones’ care needs. 

It can give you financial flexibility if you are a carer for a dependent, and give you access to claim other benefits. 

If your loved one is of pension age, they’ll also receive a state pension alongside your Carer’s Allowance benefit.

Confused by the benefits system?

Financial benefits for older people

calculating your benefits

Why is Carer’s Allowance taxable?

Carer’s Allowance is taxable as income, so you must notify HM Revenue and Customs (HMRC) if you receive it.

If you have a combined income that goes over the tax-free threshold which is £12,570 it will be taxed. 

Like any other work income, any money that you receive will be taxed by an employer or through tax returns.

Speaking to a qualified financial adviser can help if you have questions about filing tax returns and self-assessment.

How can I get Carer’s Allowance?

If you are looking to claim Carer’s Allowance, there are a few points to keep in mind before you apply.

You can receive the allowance if you work 35 hours or more providing care for a dependent, and earn £151 or less a week from employment. 

The person you’re caring for must also have qualifying benefits, so they should be receiving another payment or allowance. 

If you don’t qualify, you can also apply for Pension Credit or a  Universal Credit to help support you.

you can get paid for care work

Why should I claim Carer’s Allowance?

Caring for a loved one is hard work and the extra £81.90 can come in very handy in your household. 

The allowance can help pay for the cost of providing daily care and living costs for your loved one. 

It can also make you eligible for many other state benefits, which can act as a safety net when finances are strained. 

Any extra financial help can give you and your loved one peace of mind, something you richly deserve in this scenario.

Carer’s Credit

If you work 20 hours as a carer, you may not be eligible for Carer’s Allowance, but you could claim Carer’s Credit.

There’s no extra payment available, but you are given credits on your National Insurance record.

To be eligible for your State Pension in later life, you need to have a certain number of NI contributions.

Carer’s Credit means that even if you are registered unemployed, you will get NI credits towards your pension.

worried about money

What tax-free benefits can I claim?

There are many tax-free state benefits you can claim even if you can’t get Carer’s Allowance.

Tax-free state benefits are a great way to gain some financial support without having to compromise on any deductions. 

Most of these options are known as state benefits, so it’s important to check the eligibility criteria when applying. 

Not all benefits are tax-free, so it’s best to consult the official government site or with a certified financial advisor.

What is underlying entitlement?

You can claim ‘underlying entitlement’ if you meet the requirement of another benefit but are refused to receive payment. 

If you decide to claim underlying entitlement, you will receive a letter proving your caring role.

This can help you potentially get extra income on any means-tested benefit you’re already receiving. 

So, it’s worth a shot if you believe you should receive extra payments on a means-tested benefit that you qualify for. 

 

What are some financial benefits for older people?

If your dependent or loved one is older, there are a range of benefits that can help them financially. 

Claiming benefits for the elderly can help take some of the pressure off you as their carer.

Government support schemes can help with council tax and energy bills if your loved one lives alone. 

These benefits can also allow them to feel safe and live more confidently out of care hours.

Is Carer's Allowance taxable

How to help yourself as a carer

Being a carer can be tough, especially if you have family or work responsibilities, but small actions can have a big impact.  

There are ways to help yourself as a carer to make your care life a little easier for you and your loved one. 

Speaking to your workplace about flexible hours is one solution for getting the time you need to fulfil your caring role. 

Using respite care is another way to get a break from daily stresses so you can feel refreshed when returning to care duties.

do you look after a loved one as a carer

Finding care has never been so easy

Here at Sweet Pea, finding care is simple, and with our online platform, you can find tailored at-home care in a few clicks.

Just enter your loved ones’ details, make a care request today, and choose from our local care providers. 

Click below to get started.