Fostering and Carers Allowance.

C.C.L.

Dunroamin wrote: »

Apologies for the out of date link but the basic facts haven't changed.

ETA

From http://www.fostercarers-allowances.co.uk/

"Tax position

Foster carers are treated by H M Revenue & Customs (HMRC) as carrying on a business for tax purposes. This means that:

You will be treated as a self-employed person
You may be required to prepare and file with HMRC a self-assessment tax return, and
You may be liable to pay income tax and National Insurance contributions.
As a foster carer, you have a choice as to how you are taxed. In order to calculate your taxable fostering income, there are two methods: the profit method and the simple method. The latter is usually the more beneficial method.

The introduction of tax relief in 2003 means that foster carers in the UK do not pay tax on their income from fostering, up to a maximum of £10,000 plus allowances."

Having just checked paperwork from HMRC, it's a shortend version of the tax return that's submitted, and because of the level of payments by local authorities, an nil earnings return is sent as the payments don't reach the allowances. I would scan one and put it on here but there's too much private information on it. Carers allowance is also allowed to be claimed whilst being a foster carer, but as I said before, for WTC, it's classed as income.

Dunroamin

C.C.L. wrote: »

Having just checked paperwork from HMRC, it's a shortend version of the tax return that's submitted, and because of the level of payments by local authorities, an nil earnings return is sent as the payments don't reach the allowances. I would scan one and put it on here but there's too much private information on it. Carers allowance is also allowed to be claimed whilst being a foster carer, but as I said before, for WTC, it's classed as income.

So you personally don't pay tax because you're under the threshold rather than because "Payments to a foster carer are classed as nil earnings"?

C.C.L.

Dunroamin wrote: »

So you personally don't pay tax because you're under the threshold rather than because "Payments to a foster carer are classed as nil earnings"?

No, they're classed as nil earnings, and it's not just me personally, our whole group of foster carers tax returns are the same. We had someone from the tax office come to one of our meetings and they expained it all to us.
Please don't try and turn this around, I know what the tax office say, and the returns we fill in, and the replies we get from HMRC.

wattdallas

I too am a foster carer and CCL is right.

Anubis_2

C.C.L. wrote: »

No, they're classed as nil earnings, and it's not just me personally, our whole group of foster carers tax returns are the same. We had someone from the tax office come to one of our meetings and they expained it all to us.
Please don't try and turn this around, I know what the tax office say, and the returns we fill in, and the replies we get from HMRC.

In that case the HMRC need to update their site then because they CLEARLY state the exemption is 10,000 and after that calculations have to be done for tax purposes:

http://www.hmrc.gov.uk/individuals/foster-carers.htm#d

Dunroamin

C.C.L. wrote: »

No, they're classed as nil earnings, and it's not just me personally, our whole group of foster carers tax returns are the same. We had someone from the tax office come to one of our meetings and they expained it all to us.
Please don't try and turn this around, I know what the tax office say, and the returns we fill in, and the replies we get from HMRC.

It seems very unfortunate that what they've said to you is different from the information that they (and other organisations) publish on the internet.

I'll try and send them an email tomorrow to clarify the issue.

ETA
Directgov seem to have got it wrong as well.

"Do foster carers pay Income Tax?
The current rules mean many UK foster carers now pay no tax on the money they earn from fostering. Foster carers can be exempt from tax on all or most of their fostering income, depending on:
how many children they look after
whether or not it is a full tax year
whether or not there are other foster carers in the same household
There is a fixed tax exemption of up to £10,000 per year (less if for a shorter period) which is shared equally among any foster carers in the same household. After that, foster carers get tax relief for every week (or part week) that a child is in their care. For every week (or part week) that a child aged 11 or older is with them, the foster carer's tax relief is £250 per child. For every week (or part week) that a child aged under 11 is in their care, the tax relief is £200 per child."

So a single person who has one older child for a full year would only pay tax on any foster earnings over £22,500.

Dunroamin

C.C.L. wrote: »

No, they're classed as nil earnings, and it's not just me personally, our whole group of foster carers tax returns are the same. We had someone from the tax office come to one of our meetings and they expained it all to us.
.

Actually, rereading your earlier post, you said exactly what I am saying,

"and because of the level of payments by local authorities, an nil earnings return is sent as the payments don't reach the allowances."

keigcf

I do Dunroamin way, advised 4 years ago, but after C C L states they had someone from the tax office in and they advised different it makes me panic!

megc_2

Dunroamin wrote: »

Actually, rereading your earlier post, you said exactly what I am saying,

"and because of the level of payments by local authorities, an nil earnings return is sent as the payments don't reach the allowances."

Hi all, I am a supervising social workere for a local authority fostering team and as part of my job I do help carers to sort out their tax position as well as organise tax advice sessions by the Tax Office. Whether you are required to pay tax will depend on if you have the maximum number of placements for an entire year in addition tot he precise level of your fostering fee. This can vary significantly between different local authorities and can be different again if you work for an independent fostering agency. It also depends on whether you have any other taxable income, that would count towards your personal tax free allowance, such as a part time job, or other business.
With regard to tax credits, you MAY be eligible for some working tax credit if you have a household income below the threshold and meet the requirements. You will not however be entitled to any child tax credit for a looked after child, as the local authority will be providing money to you for their support (whether directly or through your independent fostering agency).
Likewise a looked after child does not count in household size for housing benefit purposes, nor for the size of home you need if applying for social housing.The income (fee) element of your fostering renumeration does count as income for means tested benefits purposes, though not the element designated for the child's maintenance.
If in any doubt whatsoever, inform the relevant people and ask for the facts. You could also check with the Fostering Network, who may be able to help you.

Dunroamin

megc wrote: »

Hi all, I am a supervising social workere for a local authority fostering team and as part of my job I do help carers to sort out their tax position as well as organise tax advice sessions by the Tax Office. Whether you are required to pay tax will depend on if you have the maximum number of placements for an entire year in addition tot he precise level of your fostering fee. This can vary significantly between different local authorities and can be different again if you work for an independent fostering agency. It also depends on whether you have any other taxable income, that would count towards your personal tax free allowance, such as a part time job, or other business.
With regard to tax credits, you MAY be eligible for some working tax credit if you have a household income below the threshold and meet the requirements. You will not however be entitled to any child tax credit for a looked after child, as the local authority will be providing money to you for their support (whether directly or through your independent fostering agency).
Likewise a looked after child does not count in household size for housing benefit purposes, nor for the size of home you need if applying for social housing.The income (fee) element of your fostering renumeration does count as income for means tested benefits purposes, though not the element designated for the child's maintenance.
If in any doubt whatsoever, inform the relevant people and ask for the facts. You could also check with the Fostering Network, who may be able to help you.

Thank you very much for your detailed explanation. Hopefully that should settle the matter.