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Foster Carers Tax Allowance
A generous foster carers tax allowance means that foster carers in the UK don’t have to pay tax on their income.
According to the government, foster carers are equivalent to self-employed professionals and stating your role as a foster carer on a tax return saves you from paying back a portion of your income.
Why foster carers don’t pay tax
Foster carers receive a tax allowance because fostering is regarded as a method of self-employment under UK regulations. However, this only counts if:
- You are a foster carer with an Independent Fostering Agency like FCA, or
- You are a foster carer with a Local Authority
If you are fostering independently then you don’t qualify for the foster carers tax allowance, as this is not formally recognised as employment.
How do you claim foster carers tax allowance?
If you want to claim foster carers tax allowance, you need to fill out a self-employment tax return.
All foster carers should be aware that the foster carers tax allowance only applies to the money you spend on children in foster care. This includes, but is not limited to:
- Clothing for children in foster care
- Travel expenses (i.e. driving to and from school)
- School expenses (i.e. trips, uniforms and books)
- Food for children in foster care
- Birthdays/Christmas presents for children in foster care
If the total money spent on foster care, as totalled up by the receipts you submit with your tax return, is equal to or less than your fostering payments then you won’t be taxed at all, so you don’t need to claim it back.
But if the money you spend on foster care is more than the money you have been paid, you need to claim for the tax money back. You can either claim the amount of tax back on your fostering income as a whole – including excess – or you can claim back on the excess separately.
Find out more about foster carers tax allowance
It all sounds very complicated, but qualifying for your foster carers tax allowance should be straightforward with the right forms and advice. And claiming back means that you are making the most of the financial benefits of becoming a foster carer.
For more information about the financial aspects of fostering, read about FCA’s fostering allowances and fees. To become a foster carer with FCA, or to talk to one of our dedicated Fostering Advisors, call us today on 0800 023 4561 or enquire online.
