Don’t risk HMRC fines.
Taxes can be a pain, especially when you’re self employed. Here, we’ll discuss how taxes work for foster carers and give you some tips.
So, you’ve been approved as a foster carer – what’s next? When you start to foster, you’ll need to register as self-employed – even as a family and friends foster carer.
To register as self employed, you’ll need what’s called a UTR number (Unique Taxpayer Reference).
This step is super-important! HMRC will charge you if you don’t register as self-employed within 6 months after the end of the tax year in which you begin fostering.
Confusing, we know. But we’ll explain what we mean!
Basically, the tax year runs from 6th April to the following 5th April.
This means you’ll need to file your tax return by the deadline of 31st January. If you miss this deadline, you will be subject to HMRC’s penalty fees 😱
What are these, you ask? Check out our Late Filing Penalty Calculator below to find out more.
Don’t worry! Follow these tips and you’ll be sure to file on time:
The government will send you payments every week to help with the costs of fostering. How much you’ll receive depends on a few factors:
The base rate of this payment is called the Minimum Weekly Allowance.
As you can see, it’s based on where you live:
If you’re claiming any benefits, being a foster carer can affect them. Make sure that you let your employer know that you’re also receiving a foster care allowance.
You might be able to claim:
To learn more about how your benefits might be affected, contact your agency or Fosterline.
Qualifying Care Relief, also known as Foster Care Relief, is the way the government deals with tax exemptions for foster carers. What this means is you will be able to receive certain payments without having to pay any tax.
You can use it if the children or adults in your care were placed by:
The qualifying amount (the amount you can claim tax-free) is made up of 2 parts:
A weekly amount for each cared for child or adult:
|Age of child||Tax relief|
|Under 11||£200 per child|
|11 or over||£250 per child|
A fixed amount of £10,000 for each household for a full year.
Be aware that if you use Qualifying Care Relief, you can’t claim expenses or capital allowances.
If there are multiple carers in one household, you share the fixed sum.
Therefore, to work out the share of the fixed amount you’ll need to:
Example: Mark is a foster carer. He takes care of one 7 year old for the entire year (52 weeks) and one 12 year old for 8 weeks in the year. The qualifying amount is calculated by adding:
As previously mentioned, you’ll have to let HMRC know about any payments you’ve received because they’re seen as income. Some types of payments you’ll need to include are:
There are a few of different scenarios you might encounter, depending on the payments you’ve received. Here are two for you to look through 👇
There are two methods to tackle this:
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