Review of care relief for families mainly used by better off

A TAX relief mainly used to support stay-at-home mothers is under review ahead of Budget 2020, with officials noting one-in-10 homes getting the benefit had an income of more than €100,000 a year.

Most families receiving the benefit have above-average incomes, according to papers prepared ahead of Budget 2020 which called into question its effectiveness as a benefit to working parents.

The Home Carer Credit (HCC) was brought in after the controversy around so-called tax individualisation for married couples, introduced back in 2000, and which made it more attractive from a tax perspective for both parents in a couple to work outside the home.

The HCC effectively rowed back on what was seen as the potentially anti-family aspect of individualisation by providing financial relief to families where one parent gave up work to look after children.

It is worth up to €1,500 a year per family. The tax relief can be claimed by parents where one spouse works primarily in the home to care for children or other dependants.

The stay-at-home parent can earn part-time income of up to €7,200 a year and still qualify for the full credit, and there is no cap on how much the main breadwinner in the couple earns.

Figures from the Department of Finance show the number of claimants has remained relatively static over the past five years, staying at between 80,000 to 85,000 households a year, even as the relief itself and the cap on the stay-at-home parent’s out-ofhome income has increased – in theory making the relief more attractive.

The majority of home carers where the relief is claimed are women. Around a quarter of claimants have gross incomes of less than €30,000 a year. That suggests the majority of claimants earn above average incomes, and over 10pc have gross incomes of more than €100,000 a year, the department said.

The HCC is being reviewed under a commitment in the so-called ‘First Five: Whole of Government Strategy for Babies, Young Children and Their Families’. That will look to assess the tax relief against a target of supporting working families who take care of young children at home.

The results will be published as part of Budget 2020.