What do Foster Carers need to know about paying UK tax? So many Foster Carers have questions about their tax status, what to pay, how to pay and where to pay. It’s certainly an area where people need help and advice.
Here is some key information and links to help you regarding tax and foster care. As always, do speak with a specialist about your individual circumstances!
Do Foster Carers Need to Pay Tax?
The tax you will pay depends on the total amount of fostering payments you receive and things like whether you have other taxable income.- Do you work? Or do you have a pension?
As a foster carer you need to register with HMRC and complete an annual tax return. You are part of a tax scheme called QUALIFYING CARE RELIEF (QCR) which is a tax free amount specifically for foster carers.
Find out more about QCR HERE
Do I Need to Register as Self-Employed?
Yes! All foster carers are classed as self-employed by HMRC, so you need to make sure you are registered with them. This requirement is true no matter if you are a full-time foster carer or if you only provide respite care.
I’m Already Registered as Self-Employed for My Job – Do I Have to Register Again For My Fostering?
No you don’t. But you should contact HMRC to let them know you are now a foster carer and provide information on your tax return form about the fostering you do.
Do I Have to Complete a Self Assessment Tax Return?
Yes. You will need to do this every year that you are a foster carer. If you want to, you can complete the form yourself or you can get help from an accountant.
How Do I Work Out How Much Tax I Owe on My Fostering Income?
The advice on this comes from The Fostering Network who have worked with a specialist accountant to answer tax questions.
“By using the Qualifying Care Relief scheme you can calculate whether you have any taxable income from fostering. If you do, and you have used up your personal allowance, then this amount will be taxed at 20 per cent for all basic rate taxpayers.
Note, if any tax has been deducted at source, this will be taken off this figure to work out your tax due.”
As a foster carer and member of The Fostering Network you can get full access to help and advice on things like tax, benefits and fostering fees and allowances.
Do I Need to Keep Receipts or Records for Tax Purposes?
Generally yes! Again The Fostering Network provides good information about this for you. They say…
“You will need to keep remittance slips from your fostering service and your annual summary if they provide you with one.
As a foster carer you will also need information about your placements, such as the dates children were in your care, including respite placements (even if they were only with you for one night) and the ages of each child placed with you.
Details of your total income will be needed. Including for example the fostering allowance for the child, any fee, reward or skill payment, holiday payments, reimbursed mileage, school uniform allowance and any loyalty payments you received from your fostering service. That’s everything your fostering service has paid to you in the tax year (ended 5 April).”
How Do I Pay My Tax?First you need to complete and submit your Self Assessment tax return. Then you can arrange to pay whatever amount is due via online or telephone banking using a debit card. You will receive a statement from HMRC and this can be paid via your bank or building society.
I’m an Approved Foster Carer But I Have Not Registered as Self-Employed!?
Don’t worry alot of foster carers do not realise they have to register as self-employed. If this is you, contact HM Revenue and Customs. Before you contact them to register, read and understand the Qualifying Care Relief scheme to see whether you have any tax liability on your fostering income. You can then let HMRC know when you contact them. If you are concerned, speak to your social worker, or contact The Fostering Network HELPLINE and have chat with them. In some cases you may want to talk to an accountant.
What Do I Do When I Stop Fostering?You will need to let HMRC know that you have stopped fostering. They will require you to complete a Self Assessment tax return for the last tax year when you fostered.
The Fostering Network has specific information available to help Foster Carers with TAX and NATIONAL INSURANCE. They have a publication that you can get called INCOME TAX AND NATIONAL INSURANCE SIGNPOST and you can call their HELPLINE.
They can also recommend an accountant to help you, if that is what you need.
Do you still have questions about aspects of fostering? If you’d like to know more about us and our not-for-profit fostering agency, why not join one of our Q&A sessions or meet up with one of our local social workers and see if fostering is an option for you.
If you are over 21, live in Birmingham, Nottingham, Leeds or Manchester, have room in your home and want to make a real difference to a child’s life we would love to speak with you!