Single Person Child Carer Credit

Mother and children

This week we will look at the Single Person Child Carer Credit [SPCCC]. It is a little tricky and warrants 12 pages of guidance in a recently updated Revenue manual.

It’s important to understand the rules. We will introduce you to a primary claimant and a secondary claimant. You’ll meet the Bagges. And find out what is a qualifying child, what the SPCCC is worth, and how to claim it.

  • Setting the Scene
  • Value of the Credit
  • Qualifying Child
  • Year or Separation
  • Year after separation
  • What happens next in 2023?

Setting the Scene

 Tommy and Norma met in Rubys in 1998 and after 10 vodka red bulls, the beer goggles kicked in and they fell crazy in love. Tommy got down on his good knee in 2000 and proposed. Norma accepted and they got married to much fanfare in 2001. A big splash with a designer wedding dress, a helicopter to the reception and a honeymoon in Vegas. Along came young Paddy in 2003, Grainne in 2007 and Fred in 2012.

This is the Bagge family. Circumstances got difficult for Tommy and Norma in 2020 and they weren’t getting on. As a result, they decided to separate on the 1st of February 2021. Tommy moved out that day and rented a house in the local town. The children live with Norma, but they stay with Tommy for 4 days every 2 weeks. Paddy is doing a carpentry apprenticeship with a local builder. Grainne is in transition year in secondary school and Fred is in 4th class in primary.

Norma is a part-time SNA in the local primary school earning €16000 per annum. Tommy works in IT and has a salary of €90000 per annum from his company.

Value of the Credit

The value of the credit is €2450 per annum. This has two parts. The annual tax credit is worth €1650. There is also a €4000 increase in the lower rate band. That’s an extra €4000 at 20% which is worth €800. So, adding the two together gets us to €2450.

Qualifying Child

All the Bagge children are qualifying. A qualifying child is a child

  • that is born in the year of assessment
  • who, at the start of the tax year, is under 18 or
  • who, if over 18 at the start of a tax year, is in
  1. full-time instruction at any university, college, school or other educational establishment or
  2. is permanently incapacitated because of mental or physical infirmity.

The qualifying child can be the person’s own child or another child who is being looked after by that person. The other child must be in the custody of the individual and maintained by him/her for the greater part of the tax year.

There is a distinction between custody and guardianship. Custody means having day to day responsibility for the upbringing of the child. The parent or individual has responsibility for his or her charge and care. In a guardianship scenario, the guardian can make important decisions about the child. Examples would be medical treatment and what schools to attend. But the guardian does not have regular contact and isn’t responsible for day-to-day care.

Child in Care

It isn’t possible to claim SPCCC for a child in care. That could be a foster parent looking after a foster child or a child in residential care. This is because the cost of maintaining that child is borne by the HSE.

Full-time instruction

Paddy Bagge is a qualifying child. Full-time instruction includes programmes of training for any trade or profession (apprenticeships). The child must devote the whole of his or her time to the training for not less than 2 years.

Full-time instruction includes all courses relating to primary degrees and diplomas. The education course is for one year or more and can be in either a public or private educational facility.

What seems a bit odd, and unfair in my view, in Revenue guidance is their commentary on some third-level courses. It states that full-time instruction doesn’t include post-graduate and doctorate programmes. Their view is that if the student is primarily involved in “self-managed research and learning” that course doesn’t qualify.

Year of Separation

2021 is the year of separation for the Bagges. Their taxes are under the joint assessment rules with Tommy as the assessable spouse. Tommy will pay taxes on his income for the full year and on Norma’s income to the date of separation. As they were married for part of the tax year married tax credits and rate bands will apply.

Total Income [Tommy and Norma 1 month] €91333
First €44300 x 20% €8860
Balance €47033 x 40% €18813
Total €27673
Less Tax credits Married €3300
Earned Income €1650
Home carer €1600
PAYE €267
Net Tax liability €20856

Norma is a single person for tax purposes for the rest of the 2021 tax year. She will qualify for the Single Person Child Carer Credit, but it will not be of any benefit to her.

Salary Norma [Feb to Dec] €14667
Tax liability 20% €2933
Less Tax Credits – Single €1650
PAYE €1650
Tax liability Nil

Let’s assume she had an income of €40000 for the rest of 2021 then she would get the full benefit of the SPCCC.

Salary Norma [Feb to Dec] €40000
First €39300 x 20% €7860
Balance €700 x 40% €280
Total €8140
Less Tax credits – Single €1650
PAYE €1650
SPCCC €1650
Tax liability €3190

In this position, Norma benefits from the increased lower rate band going from €35300 to €39300. Plus, the SPCCC credit of €1650.

Year after Separation

It is now 2022 and Norma is coming out the other end of the breakup. She has a few new hobbies, one of which is fishing. One such hobby is proving successful where she meets Donal O’Donnell, on Plenty of Fish. Known as Dodo to his friends he is also separated with two boys in secondary school.

Romance blossoms and she tells Tommy about her new love. After breaking out in a cold sweat Tommy regains his composure. He asks Norma if herself and Dodo will be moving in together. She replies that “we could do later in the year but sure what’s it got to do with you anyway.” A lot he thinks but he keeps silent on the topic before investigating it further. He signs up for the Comerford Foley newsletter and goes to the Revenue website. With this and the University of Google, he finds out that he needs to act fast.

Norma is the primary claimant of the SPCC but given her salary, it isn’t of benefit to her. She can relinquish her claim to it to Tommy, as the secondary claimant, provided he qualifies. For a secondary claimant to qualify a qualifying child must live with him/her for 100 days or more in a year. A day is for the greater part of the day. Will Tommy have enough days? Tommy has the lads for 4 days every 2 weeks but will take them for 2 weeks over the summer holidays.

24 weeks x 4 days 96
Two weeks 14
Total days 110

Claimant Rules

If Dodo and Norma move in together Norma would no longer be able to qualify for the SPCC. To qualify the claimant must be

  • Single
  • Widowed or surviving civil partner
  • Married/in a civil partnership but separated or living apart
  • Divorced or
  • A former civil partner in a civil partnership that has been dissolved

It isn’t available to someone that is cohabiting. The race is on as Tommy must get Norma to relinquish the credit to him before she and Dodo move in together. When she is cohabiting she won’t qualify for the credit and therefore can’t transfer it to Tommy. They sort out the paperwork and Tommy gets the credit for 2022. His tax liability will look like this

Salary €90000
First €40800 x 20% €8160
Balance €49200 x 40% €19680
Total €27840
Less Tax credits – Single €1700
Earned Income €1700
SPCCC €1650
Tax liability €22790

If he didn’t get the SPCCC then his tax liability would be €25240 which is €2450 higher.

Tommy meets Pam Anderson on Tinder later in 2022 and their love is burning hot. Pam suggests they move in together straight away, but Tommy would like to wait until 2023. She doesn’t have any kids and would like to start a family. The pressure builds!

What happens next in 2023?

Love cools to Artic levels between Norma and Dodo. He’s good for nothing. She wants a modern man, but she got a fella that should be extinct. No use at DIY, loves watching box sets of anything, hates work and isn’t fond of showers either. Norma turfs him out and picks herself up again. She was studying for the last few years and qualifies as a clinical technician in March 2023. She starts a new job in a multinational company earning €45000 per annum.

The SPCCC will benefit her in 2023 so she wants it back. As she is single she will qualify again. Norma contacts the tax office and informs them of her change in circumstances. She wants the credit back and that makes sense given her higher salary. While she qualifies in 2023, she won’t be able to get the credit back until 2024.

Tommy and Pam move in together on Valentine’s Day. On the face of it, as Tommy is now cohabiting, he wouldn’t qualify for it in 2023. But by way of concession, the credit remains in place for the year of

  1. Marriage
  2. Registration of civil partnership
  3. Commencement of cohabitation or
  4. Reconciliation with a former spouse or civil partner

Little Sam is born in December 2023 and it’s back to night feeds and nappy changing for Tommy. He gets the elbow from Pam in the bed to say that it’s his turn.

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