Subsection (8) of section 466A of the Taxes Consolidation Act 1997 (TCA) provides that a couple may not receive both the increased standard rate band and the home carer credit in a tax year.
Carer’s Benefit is taxable income under section 112 TCA. As a result, a jointly assessed couple where one spouse or civil partner is in receipt of this payment is considered to be a dual income household and, thus, entitled to an increase in the standard rate band of the lesser of €26,300 or the income of the lower earner. This means that the maximum joint standard rate band a couple can have is €70,600 (€44,300 + €26,300), which is the equivalent of double the single earner rate band. However, it is not possible for one spouse or civil partner to have the full extended rate band of €70,600- an individual can have no more than €44,300.
If a couple decide to opt for the home carer credit instead of the increased standard rate band, the carer spouse or civil partner may earn up to €7,200 per year without affecting the amount of the credit awarded. However, Carer’s Benefit is not taken into account when calculating the income of the carer spouse or civil partner for the purposes of the €7,200 income threshold. In other words, if the only income of the carer spouse or civil partner is Carer’s Benefit, there will be no reduction in the home carer credit due to that spouse or civil partner.
Revenue will apply whichever relief is the most beneficial for the couple concerned.