Foster carer wishing to start pension

Emma1965

I am a foster carer earning around £15-20,000 a year. I wish to start a pension. I pay no income tax due to the special tax arrangements for foster carers. Is £3600 the maximum amount I can contribute?

Thanks

xylophone

I am a foster carer earning around £15-20,000 a year.

The question is not so much how much can be contributed to a pension as to how much can be contributed on a tax relieved basis.

I should think that you would need to establish whether the foster payments ( or a certain element of the payments) are "relevant earnings" for pension purposes.

https://www.gov.uk/hmrc-internal-manuals/pensions-tax-manual/ptm044100


http://www.hmrc.gov.uk/courses/syob3/fc/index.htm

https://www.gov.uk/hmrc-internal-manuals/national-insurance-manual/nim21026

Will it be the reward element (or "profit") that would be classed as relevant earnings?

Check with HMRC?

If your gross relevant earnings are under £3600 ( or you have no relevant earnings) you can contribute up to £2880 to a personal pension and the provider will claim tax relief of £720.

If your gross relevant earnings are £15,000 then you could contribute up to £12000 to a personal pension and receive up to £3000 in tax relief.

michaels

Might a Lisa make more sense?

Emma1965

Thanks for your reply xylophone. I’ve had a look at the links.

I use the qualifying care relief method to calculate my tax on my self assessment, and pay no tax as my total receipts are less than the threshold of £10000 + £200 per child per week. This classes me as making no profit, so it follows that I receive tax relief on the first £2880 that I contribute. Tbh until a few days ago I had no idea a non tax payer could get any such relief so I’m delighted with that.

I’m 52 now so a Lisa is out. Will need to look into other options. It’s a small amount by most standards, but every little helps.


Cheers

Dox

Emma - have you contacted the local authority/organisation through which your foster placements are arranged? They may be helpful on this sort of thing.

Emma1965

Thanks. I have asked the local authority and they say I’m self employed so not able to access pension or advice from them. I may try fostering network for information.

atush

Or HMRC for relevent earnings.

Did you read the links above?