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Making Tax Digital - Starts 2019...I'm ready, are you ?

Foster Carers receive favourable tax treatment from HM Revenue and Customs


I have worked in the Childcare sector with my wife for many years and bring our experience in helping you to navigate the complexities of this specialised area in accounts and Tax Return preparation.

We know that your role as carer is extremely demanding and rewarding and I can help you by taking care of all your paperwork and compliance obligations.

Please read on for additional Foster Carer information and if you require my services then I would be delighted to assist you.


Foster Carer Allowance


The allowance covers two parts, a maintenance allowance which covers the cost of looking after a young person and the reward element in recognition of the foster carer's skills. The income that you receive covers the cost of living for both you as the carer and the child or young person you look after. The fostering payments will cover the following types of expenditure:-

Food, Clothing, Household bills, Travelling Expenses, Other such as a payment for birthdays, Christmas, school dinners and religious festivals.


How does your foster care tax relief work?


If your total receipts from qualifying care in the tax year do not exceed your qualifying amount, those receipts will be free from income tax for that year. Your total receipts from foster care are all the payments you receive from your local authority, health service body and independent fostering agencies.


What is your qualifying foster care amount?


This consists of two parts which you should add together.

          ·      An annual fixed amount of £10,000 for each household

          ·      If you are a Foster Carer for less than a year then this                              amount should be apportioned for the year.

          ·      A weekly amount for each person placed with a Foster Carer. 


What to do if your qualifying care receipts exceed your qualifying amount


You have two options for calculating the Foster Care tax you have to pay

          ·      The profit method - this is where you pay tax on the actual                  caring receipts minus your actual expenses and capital                  allowances.

          ·      The simplified method - where you pay tax on your actual                  receipts minus your qualifying amount. If you use this                             method then you don't have to consider your expenses and                  capital allowances.

You must consider the best method to use as your taxable profit will be less with one of the options available. You must inform HMRC if you want to use the simplified method.

Let me work through the complexities for you, decide which is the best method and undertake the Accounting and Tax Return obligations for you. 


Are you in receipt of benefits


As a self employed Foster Carer in receipt of a fostering allowance you will be unable to claim Child Tax Credit or Child Benefit however you may be able to claim Working Tax Credit and other benefits such as income support and council tax benefits depending on your individual circumstances.


How much will I charge ?


I charge a fixed fee of £100 per Tax Return* which is much lower than Tax Return services available via Foster Carer Support Associations.


*Most carers are sole traders even if their other half helps out with the Fostering so only one Tax Return is needed but if you Foster as a Partnership there will be three Tax Returns, yourself, partner and the Partnership for a fixed fee of £250.

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