FOSTER CARER'S TAX

FOSTER CARER'S TAX

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Is all of the income received by a Foster Carer Classed as income including all maintenance costs provided by a local authority to provide care for a foster child?

I have read up on the issue and believe that is , however a new client has been told otherwise by his local authority

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By jpcentral
20th Nov 2012 07:47

The income is classed as income but there is an allowance to be offset against this income which effectively means that most foster carers are not taxed. More information can be found by downloading the info sheet from HMRC:

http://www.hmrc.gov.uk/helpsheets/hs236.pdf 

 

John Perry

www.centralbusiness.co.uk

 

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By maajp2
20th Nov 2012 10:20

See the certifcate from the local authority

The income received will all be taxable, the help sheet given by John Perry is the one to use and shows also which boxes to fill on the tax return. There may a some incidental payments such as training (around £100) which may not classed as taxable income.

The local authority should give a certificate of income and allowances for the year giving a net amount on which tax should be paid (usually zero). There is a possibility that because a foster child has additional needs the payments received are more than the allowances, again this should be evident from the certificate. Also non taxable payments such as the training will be shown separately on the certificate.

I have had experience though that some people at the local authority do not fully understand the payments made to foster carers and the taxation surrounding the payments.

All in all see what is on the certificate at the end of the year. If they have not received one get it requested.

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By fostertax.net
28th Feb 2013 11:51

Foster carers' tax

There is a great deal of confusion and ignorance concerning the taxation of foster carers, mainly because of the inability of local authorities to give proper advice.

Foster carers are self employed and should all be registered for self assessment and Class 2 NIC. All income received in respect of the care is potentially taxable including fees and allowances for maintenance. Not everyone is liable for tax because of significant tax allowances available, but it is quite possible that if there is more than one child in care there will be a tax liability.

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