What Swansea Foster Carers Need to Know About Tax

What You and Swansea Foster Carers Need to Know About Tax From Foster Care Coordinators and Agencies in Swansea.

Many foster carers do not understand the taxation of their foster payments but the simple explanation is that the majority of Fostering Payments are exempt from Income Tax under Qualifying Care Relief.

Qualifying Care Relief Explained

Foster carers do not have to pay any income tax on money they receive for fostering as they get Qualifying Care Relief. This sets a tax-free threshold on fostering income for all carers.

How the Threshold Is Calculated

There is a fixed amount of £18,140 in each year. In addition to this, for each child in care, there is a per child per week amount. For children under 11 this is £375 per week and for children over 11 this is £450 per week. Multiply the weekly amount by the number of weeks each child was in care and add this to the above fixed amount for the year.

Register for Self Assessment Anyway

Even if you are below the threshold and do not need to pay any tax, HMRC requires that all foster carers are registered for Self Assessment. More information about how foster carer pay and tax works is available on GOV.UK.

National Insurance Considerations

Foster carers are treated as self-employed for tax purposes. They do not however need to pay National Insurance on fostering income provided their earnings are within the Qualifying Care Relief threshold.

Keep Records Through the Year

You need to note the name, age and start and end dates of all children living in your care and retain all payment statements from your agency for these will be required for calculating your threshold. If you are looking for Foster Care Swansea, see https://saferfostering.org.uk/foster-care-wales/swansea.

Of course, excess fostering income does attract tax, but this is usually much less than expected.