Hello again and welcome to this edition of On The money. This week, the sudden winter chill serves as a reminder of the need to keep an eye on older friends, neighbours and loved ones, who can find this time of year particularly challenging – not least as they struggle to meet heating bills on limited income.
Some go considerably further, caring for a dependent relative in their own home, arranging for outside carers to provide support and companionship and even, in extremis, looking at long-term nursing home care. Each of these can involve a significant financial commitment so it will come as some relief for anyone considering the growing care needs of elderly relatives that there are State supports and tax relief available to help make the cost manageable.
But how much can you get and how do you go about it? It all depends on the care provided. There are several potential supports available, including Carer’s Benefit, Carer’s Allowance, Dependent Relative tax credit, Home Carer’s tax credit and then relief for hiring a carer or nursing home fees. Let’s look at each of them in turn.
Carer’s Benefit
Carer’s Benefit is available to you if you need to leave work or cut back on your work hours to care for someone and you have a PRSI record of at least three years (156 weekly social insurance stamps) and either 39 stamps in the 12 months before you claim the benefit or 26 in the current tax year and 26 in the preceding one.
Benefit is paid at €249 a week if you are caring for one person or up to €373.50 a week if you are caring for two or more people. It can be paid for up to two years either in one period or over a number of periods.
You can still work for up to 18 and a half hours a week earning up to €450 a week and qualify for the benefit.
It is recommended that you apply to social welfare for the benefit at least six weeks before you intend to take it.
Carer’s Allowance
The Carer’s Allowance is a means-tested payment for people taking full-time care (at least 35 hours a week) of a person who needs care because of their age, disability or illness, where the carer is not working more than 18 and a half hours a week.
The means test looks at both your income and assets. The first €450 of your income is disregarded for the purpose of the means test and the first €50,000 of savings/assets. That income figure is due to rise to €625 from next July with both figures being doubled for the family income of a couple.
Some income is not included – such as income under rent a room (up to €14,000 a year) – but you can find more details here.
If eligible, you can receive up to €248 a week, a figure that will rise to €260 in January. If you are caring for more than one person, that figure can rise to €372 a week (rising to €390 next year).
There are certain other benefits too. As this is targeted at people of limited means, carers qualifying for the Carer’s Allowance will get a free travel pass and GP visit card automatically. They also qualify automatically for the Carer’s Support Grant, a once-off annual payment given on the first Thursday in June each year which was €1,850 this year and will rise to €2,000 next year.
Dependent Relative Tax Credit
Outside of welfare payments, you may qualify for a tax credit, of which there are several.
If you are funding some of the living costs of a “dependent”, you may qualify for the Dependent Relative Tax Credit. And who qualifies as a dependent? It could be a widowed parent or their surviving civil partner, a relative who is unable to maintain themselves or one of your sons or daughters who lives with you and who you rely on because of your age or health.
Interestingly, they do not even have to live in Ireland but, unless they are a child living with and caring for you, they need to be over the age of 18.
The key thing here is that the income of your relative must be below a certain limit. For this year, that limit is €17,404, and that figure includes all income, including any welfare payments, pensions and even bank deposit interest. The income level rose from €16,780 in 2023.
If they do qualify, the tax credit is worth €245 as it has been since 2021. Before that, it was a meagre €70. From January, that will rise to €305 following increases announced in the budget.
You can apply for the Dependent Relative Tax Credit for up to two relatives – so a maximum benefit this year of €490, rising to €610 next year. And you can claim back for financial support you may have given over the past four years.
Home Carer’s Tax Credit
This can be a very useful one. It is available to married couples or civil partners assessed jointly for tax purposes where one person stays at home to care for a dependent. In this case, taking care of the kids at home full-time is likely to qualify for the credit because a dependent is defined as a child eligible for child benefit payment, anyone over the age of 65 or anyone with a physical or mental disability “that requires care due to permanent incapacitation”.
They must either live with the claimant or within two kilometres of their home. If they are not a relative, they must live with you.
There is also an income limit and this time it is the carer’s income that counts not the income of the cared. It must be less than €10,400. If you earn less than €7200 a year, you can claim the maximum annual credit of €1,700. Above that income level, the credit is adjusted downwards, disappearing altogether if you earn above the €10,400 level.
Employing a carer
No one wants to be fussed about in their own home but there can come a time when we are no longer as able to be as independent as we would like. And when the alternative may be leaving the home and becoming a long-term resident in a nursing home, most people would agree that putting up with a little intrusion at home is the better option.
Generally, the first port of call is the HSE which does operate a homecare service on the basis of assessed need rather than financial means. The service is provided either by carers employed directly by the HSE or by agency staff hired by the health service. It is personal care, such as help with dressing, bathing, cooking and eating, or ensuring medications are taken.
However, predictably, this service and its budget is stretched way beyond its capacity and it is likely that you or a loved one will find themselves on a waiting list for care hours. And even when hours become available, it is likely that there will not be enough to cover the care required.
The alternative is for either the person requiring care or someone on their behalf paying privately for it. Ironically, this will generally involve you paying the same agency staff that budget constraints prevent the HSE from doing on your behalf, although it is also open for you to employ an individual directly in a private capacity rather than through an agency.
To avail of tax relief, the person employing the carer must be either the person requiring the care or a family member – a spouse, civil partner, a child or a relative. That includes someone who is only related to the person needing care by marriage or civil partnership.
The person needing the care must be incapacitated – disabled by virtue of age, physical or mental condition.
If you employ a person through an agency, you can claim tax relief at the highest rate available to you. It is likely that the relief available to the older person may be limited as they may pay little or no tax but if someone else, like a family member with higher earnings is paying, they will benefit from a reduction in the amount of tax they pay at 40 per cent.
Employing someone directly clearly gives you more control over who is providing the care and making sure they are compatible with the person needing that care but it does come with added complications. First, whoever is paying the carer needs to register as an employer and they will then be responsible for the carer’s tax, including the universal social charge, and social insurance.
You also have other obligations related to providing a contract of employment, making sure their hours of work are reasonable, providing payslips, holidays and at least minimum pay. In practice, this is why people generally choose to go through an agency, most of whom are very obliging in trying to find someone who fits the particular needs of the person requiring care – and the same tax relief is available regardless of which path you choose as long as you are paying the bill.
You cannot claim tax relief for employing a carer if they only do housekeeper duties such as cleaning, as against personal care, or if you are already getting the dependent relative tax credit or the incapacitated child tax credit.
There is also a difference between personal care and nursing care – and ironically you will get less benefit for nursing care.
If you employ a qualified nurse to come in and look after yourself or a loved one on the advice of a doctor, you can claim relief but only as a health expense which is allowed only at the standard rate of income tax – 20 per cent. No, I don’t understand it either but there you go.
You will also need to be able to provide Revenue with a medical cert that shows the name and address of the patient, the nature of their illness, confirming that nursing care in the home is required, covering the full period for which the nursing care is being claimed. You also need details of the nurse’s name, address, proof of qualification and all payments made, including any receipts.
Nursing home care
Support with the cost of full-time nursing home care is also available. Most people in nursing home qualify for and apply to Fair Deal, under which they pay 80 per cent of their income and 7.5 per cent of the value of any assets over the value of €36,500 for their case with the exchequer meeting the balance. If the person in care is one half of a couple, the contributions are 40 per cent of income and 3.75 per cent of assets over €72,000.
When you consider that basic private nursing home care in Dublin anyway can cost around €7,000 a month before extras, that is not a bad deal. But if you have a valuable home or other assets, and/or you are on a big pension, the figures will not stack up and you will have to pay privately.
In that case, whoever is paying the bill is entitled to claim income tax relief at the highest rate available to them.
All relief and tax credits outlined above are done through your tax return, ideally online.
Apart from nursing care, you can also claim for other medical expenses you incur on behalf, or a relative. These include bills for doctors, certain dental procedures and hospital care, and also for prescribed medicines.
You can contact us at OnTheMoney@irishtimes.com with personal finance questions you would like to see us address. If you missed last week’s newsletter, you can read it here.
