Foster Carer Allowances and Tax

Fostering Allowance and Tax

As foster carers you are self-employed and  it is important to understand the tax implications of your role as a professional foster carer.

There are many aspects relating to being a foster carer that you will need to be aware of, particularly how HM Revenue and Customs “foster care relief” applies to you.

Who does the relief apply to?

This relief will apply to foster carers with a foster placement which would usually be treated as income as you would be self-employed.

When does the relief apply from?

The relief was introduced in 2003 and still applies to current tax years.

How does the relief work?

At this point it is best we guide you to the legislation, which can be found on the HMRC website at the following address:

http://www.hmrc.gov.uk/individuals/foster-carers.htm

On this site you will find examples of foster care relief with differing numbers of foster placements that you may have. There is also information relating to National Insurance payments, Parent and Baby Schemes, Leaving Care Act arrangements and qualifying receipts.

There is also information regarding whether you can claim Child Tax Credit for your own children, but not for your foster children and the rules relating to Working Tax Credits.

The website is a must read site for all foster carers.