South Central latest Ofsted report
South Central was rated as Good for their latest Ofsted report. By Ofsted's definition,...
Read more...Foster carers are required to abide by specific guidelines which means they can benefit from unique tax relief schemes that help to reduce the amount of money they owe as taxable profits.
Fusion has put together a quick guide full of some of the most frequently asked questions surrounding fostering and how your earnings will affect your tax.
Remember that your supervising social worker will always be available to help guide you when completing documents and are always happy to answer any questions you may have.
Foster allowances are a taxable income, this is after a generous allowance is granted per child placed. This often means the majority of carers do not pay tax on their fostering payments. However, it’s important to remember that all carers need to register with HM Revenue and Customs and complete an annual tax return. This applies even if you do not need to pay tax on your fostering payments.
All carers are classed as self-employed by HM Revenue and Customs. This means that you need to register with them as self-employed regardless of your level of income. This applies to all carers including those who do respite care.
The Qualifying Care Relief scheme allows carers who look after children to receive certain payments (referred to as qualifying amounts) tax-free. This means that carers can receive payments from their fostering service up to a certain tax threshold without being liable to pay any tax on that amount.
This applies to general foster care, parent and child placements, and staying put care. The Qualifying Care Relief tax scheme is quite generous and often foster parents will not normally have earned any taxable profit. However, all carers will need to calculate their tax at the end of each year to check if they have gone over the threshold.
For every year that you are approved as a foster carer, you need to complete a Self Assessment return. You can either complete a paper form or complete it online. The document will include information about your income from fostering but also any other income details if you are in another form of employment alongside being a carer. A tax year runs from 6th April to the following 5th April every year.
Being organised when it comes to your pay and the placements you’ve had will make it easier to work out your overall fostering personal allowance for the year. You will need information regarding your placements such as the dates the children stayed with you and the age of each foster child placed with you. It is advisable to seek independent support from an accountant, regarding your personal circumstances.
For more information, you can have a look at The Fostering Network’s guide for additional resources that may be useful. Guidance is also available on the Government website. Alternatively, you can speak to a member of our team by contacting us!
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