Tax can be confusing at the best of times, so what are all the tax allowances and benefits as a foster carer? HMRC has specific tax relief in place for foster carers which consists of three parts:
Your personal tax exempt allowance of £12,500 (2019/20);
An additional foster care tax exemption of £10,000 which is shared between foster carers living in the same household;
Additional tax relief for every week that a child is in your care: £200 per week per child under the age of 11 years old £250 per week per child aged 11 years old or over
We know that people become foster carers for a variety of reasons and although money might not be your first concern, it is important that potential foster carers understand the financial benefits and tax allowances available so that you can budget for your family’s outgoings.
Are foster carers self employed?
As a foster carer, you are classed as self-employed. Anyone who is self-employed must register to pay Class 2 National Insurance Contributions. If a foster carer has no taxable profit from their fostering, or if they have taxable profit (the amount over the threshold) by up to £6,365 (2019-2020) and £6,205 (2018-2019), they will automatically not have to pay Class 2 National Insurance Contributions.
Useful links and resources
There is lots of additional information on the HMRC website including:
HMRC's e-learning package for foster carers HMRC's online forum for foster carers HMRC webinar for self-employed people HMRC's help-sheet 236: A help sheet explaining qualifying care relief, the tax scheme for foster carers HMRC webinar for foster carers’ tax returns: A webinar explaining how to complete a tax return form
It is important to remember that the tax exemptions above will depend on each individuals circumstances and should only be used as a guide. There are lots of factors that can affect your tax liability so we advise that you speak to HMRC.
For more information about payments and allowances please visit our financial support pages.
Learn more about fostering in Rotherham
If you have any questions about fostering in Rotherham, book a call back with a member of our experienced team at a time that suits you. All our call backs are confidential.