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Foster carers tax exemptions

Foster carers tax exemptions

Hi Guys & Gals,

A friend has asked me for some help and there queries have left me a little confused!

They have recently ended up as Foster carers for a young family member (teenager). They both work and pay tax through the usual PAYE. As foster carers they now receive foster carers allowance and are trying to find out how this will affect their tax.

From what I can see on the thoroughly clear and easily understandable gov.uk website (!) it seems that they get up to £10,000 tax relief on their fosterers allowance which is in addition to their £10K personal allowance AND they get tax relief for an additional £250per week. So taking the foster "income" (assuming it is over the £10K) and the PAYE type income my friend can claim up to £33,000 tax free for the year. Can anyone confirm that this is correct? 

The other question was how to calculate the costs of the foster care. How do you assess the additional cost of someone living in your house?

Any help and advice would be hugely appreciated.

Thank you.

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By kdbr
02nd Mar 2016 15:15

Keep it Simple

There's a very good help sheet within the SA system covering this, HS236 (maybe).

Under the simple route only any excess over the exemptions you mention is taxed.  There is no need to try and account for outgoings, which is the whole point of the exercise.

If you don't go down that route then all the income is taxed subject you to you quantifying the eligible expenses.  I'd go for the simple route.

 

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By Luke
02nd Mar 2016 16:48

https://www.gov.uk/government/publications/qualifying-care-relief-foster...

gives all the details.  The important points are that the £10k allowance is per household not per foster carer and that, added to the appropriate weekly allowance, is the total of what the foster carers can have as foster care income before being taxed on it.  (It is not an allowance against other types of income).  That is called the simplified method and is what 98% of foster carer's use.  Otherwise you can do it on the actual income and expenses method but it is a complicated way of doing it as you'd have to work out food costs, housing costs, clubs etc etc

Don't forget they will be self-employed or probably in a partnership with each other.  A partnership of course gives the ability to be flexible about profit shares if there is a profit.

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