Carer’s Allowance: Your State Pension & Pension Credit payments may be affected – details

Martin Lewis on carer's allowance and the effect on pensions

Carer’s Allowance serves as a financial helping hand to individuals who have caring responsibilities for another person. The carer is not required to be related to, or to live with, the person they are caring for. Those who are eligible could get £67.25 per week under Carer’s Allowance rules, which could offer important help.

However, for those who are claiming Carer’s Allowance, it is important to note the rules surrounding the payment.

The government has explained Carer’s Allowance can affect the other benefits and payments a carer and the person they care for can receive.

In addition, people will have to pay tax on Carer’s Allowance if their income is over the Personal Allowance.

State pension payments will be particularly valuable to people who have retired, as they are established via National Insurance contributions throughout a person’s lifetime.

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However, the government has explained people will not be able to get the full amount of both Carer’s Allowance and the state pension at the same time.

The website explains: “If your pension is £67.25 a week or more, you will not get a Carer’s Allowance payment.

“If your pension is less than £67.25 a week, you’ll get a Carer’s Allowance payment to make up the difference.”

The reason behind this is that the state pension and Carer’s Allowance are deemed by the DWP as “overlapping benefits”.

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Carers UK, an organisation designed to help Britons who are caring for others, has provided further insight into the state pension and Carer’s Allowance.

The group has suggested people still make a claim for Carer’s Allowance if their state pension is worth more than the sum.

This is because Britons may be eligible to receive an ‘underlying entitlement’ to Carer’s Allowance.

These individuals should receive an ‘underlying entitlement’ letter to confirm this is the case.

Such a letter can help with a person’s finances because according to Carers UK, it can increase the means-tested benefits a person receives.

It may also unlock a person’s entitlement to means-tested benefits for the first time, depending on income.

For those who receive Pension Credit, there are similar implications to bear in mind.

If a state pension is worth more than £67.25 a week, a person will not get a Carer’s Allowance payment.

However, these individuals will see their Pension Credit payments increase instead.

If a person has deferred their state pension, the government has explained the income an individual would get from it is included when working out if someone is eligible for Carer’s Allowance.

When a person claims Carer’s Allowance their other payments may change, but total benefit payments usually go up or stay the same.

However, it is important to note the allowance does not count towards the benefit cap. 

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