Foster parent tax allowance

Foster parents are entitled to an £18,140 tax allowance on their annual fostering income. Additionally, they receive weekly tax relief for each child in their care, referred to as Qualifying Care Relief. This allows them to receive payments up to a specified amount completely tax-free. This tax relief also applies to respite care, staying put arrangements, and parent and child placements.

FOSTER CARER TAX RELIEF

Qualifying Care Relief is deducted from your overall income, which includes your weekly fostering allowance, and is made up of two parts:

A FIXED AMOUNT OF £18,140 FOR EACH HOUSEHOLD FOR A FULL YEAR

A WEEKLY TAX RELIEF ALLOWANCE FOR EACH CHILD IN YOUR CARE:

£375 for children aged under 11
£450 for children aged 11 or over

The remaining amount after deducting your Qualifying Care Relief and any additional expenses represents your taxable income.The weekly fostering tax allowance is calculated from Monday to Sunday. Therefore, if a child stays with you for just one night, you are entitled to one week of tax relief. If a child arrives on Saturday and leaves on Tuesday, you qualify for two weeks of tax relief. It's important to keep a record of the dates when children arrive and leave your care, so you can accurately report this on your tax return.

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do Foster Parent pay tax

Whether you are required to pay tax depends on several factors, including the number of children in your care, the type of placement, any enhanced fees received, and whether you have other sources of income aside from fostering.

Generally speaking, if you are caring for one child and do not have any additional income, the Qualifying Care Relief is likely to exceed the income you receive, meaning you would not owe any tax.

Foster parent tax example

Jayne cares for one young person (aged 16) as a long-term placement and has cared for him for a full tax year.

Jayne receives £29,051 from Bespoke Fostering
Qualifying care relief: £18,140
Foster carer tax relief (£450 per week for over 11's): £23,400
Total tax relief: £41,540

Jayne receives £29,051 in fostering payments from Bespoke Fostering and will pay no tax.

Mike cares for two young people (aged 5 and 10), both as long-term placements and has cared for them for a full tax year.

Mike receives £58,102 from Bespoke Fostering
Qualifying care relief: £18,140
Tax relief for the 5-year-old (£375 x 52): £19,500
Tax relief for the 10-year-old (£375 x 52): £19,500
Total tax relief: £57,140

Mike receives £58,102 in fostering payments from Bespoke Fostering and may pay tax on £962. Foster parents will also have their Personal Allowance, which may make this income completely tax-free.

Frequently Asked Questions

Please reach us at carter_fostering@icloud.com if you cannot find an answer to your question.

Will I be employed by Bespoke Fostering or self-employed?

Foster carers are considered self-employed, which means you will need to register as self-employed with HMRC and submit an annual tax return, also known as a self-assessment tax return, while fostering. Although income from fostering is taxable, there are specialised tax rules that allow you to earn up to a certain amount completely tax-free.

Do Foster Carers receive child benefit

The fostering allowance isn’t counted towards your income, therefore will not affect your eligibility to receive child tax credits or any other means-tested benefit.

However, child tax credits can only be claimed for your own children and not for any child within your care.

Foster parent tax allowance

FOSTER CARER TAX RELIEF

do Foster Parent pay tax

Foster parent tax example

Frequently Asked Questions

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