Thousands of grandparents could be missing out on a valuable boost to their State Pension.
A little-known HMRC credit can add around £350 a year to retirement income, potentially increasing pension payments by more than £7,000 over the course of retirement.
Specified Adult Childcare Credits allow family members caring for children under 12 to build up their National Insurance record.
The scheme enables parents receiving Child Benefit to transfer their NI credits to grandparents or other relatives providing childcare, particularly benefiting those who have gaps in their contribution history.
With summer holidays approaching, many grandparents will be stepping in to help working families with childcare responsibilities.
More than 202,000 applications for Specified Adult Childcare Credits were submitted to HMRC between 2016/17 and 2024/25, according to data obtained by wealth manager Quilter through a Freedom of Information request.
HMRC approved 159,116 of those claims, giving the scheme a success rate of 79 per cent.
A successful claim can boost state pension payments by about £350 a year, meaning retirees could receive more than £7,000 extra during retirement.
To qualify for the credits, applicants must be below state pension age and providing care for a child under 12 whose parent is claiming Child Benefit.
The parent or primary carer must agree to transfer their NI credits, which they can do if they are already building a qualifying year through employment or other means. Crucially, there is no minimum number of childcare hours required to make a claim.
Applications can be backdated as far as 6 April 2011, though claims for any given tax year can only be submitted after 31 October of the following year.
Jon Greer, head of retirement policy at Quilter, said: "For many people, securing the full state pension is a key foundation of later life income, and these credits can offer grandparents a relatively simple way to strengthen their entitlement while helping family with childcare."
He added: "However, the data also highlights that a significant number of applications remain unsuccessful, which points to a need for clearer guidance around eligibility and how the system works in practice."
Quilter emphasised that families should maintain their Child Benefit claim even if they opt out of receiving payments, as withdrawing entirely means no NI credits exist to transfer.
Applications for Specified Adult Childcare Credits surged from 29,967 in 2022-23 to 42,964 the following year.
HMRC attributed this notable jump to increased media attention highlighting the scheme's existence.
The collective impact of successful claims now adds more than £55million annually to retirement incomes across the country.
Despite growing uptake, roughly one in five applications continues to be turned down, with over 9,000 rejected in 2023-24 alone, suggesting ongoing confusion about eligibility criteria.
Common grounds for rejection include applicants who already possess a qualifying NI year through ongoing employment or other credits.
Mr Greer noted that as childcare expenses continue rising, grandparents are increasingly vital in supporting working families.
The credits prove especially valuable for women, who disproportionately experience gaps in their NI records from time away from the workforce.
