Qualifying care relief calculation

Please can someone confirm my understanding of this is correct

Didn't find your answer?

Never had a client who has been a foster carer and just wanted someone else to confirm my understanding of this.

She was approved and registered for fostering from 22/11/23 and so as the annual relief is £18140 I apportion this from 22/11-05/04/24 which is 136 days.

So she gets tax relief on 136/366 x £18140 for the fostering receipts (£6741)

She received £4138 during the period and so as this is less, I just tick the box on the self employment page to say she qualified, and don't include any figures and she doesn't get taxed on any of the income.

Is this correct?

Thank you

Replies (2)

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By FactChecker
26th May 2024 18:07

TBH this is not something I've dealt with ... but your analysis seems spot on (from my research).

I was going to be pedantic in response to "she doesn't get taxed on any of the income" - but I guess you meant any of the *fostering* income (as per HMRC's "In a tax year, households do not pay tax on the first £18,140 they earn from fostering. You’ll still pay tax on money you earn from a job or investment.").

BTW I can't find anything referencing apportionment of the tax exemption, but it doesn't seem to matter in your scenario (£213 pw seems a very low payment)!

But I hadn't realised that the (up to) £18,140 tax relief wasn't the end of the story ... as in "On top of the £18,140 exemption, you also get tax relief (£375 per child under 11 or £450 per child if 11+) for every week (or part week) that a child is in your care. This means you do not have to pay tax on some of your earnings over £18,140".

Nor for that matter was I aware that "All foster carers are classed as self-employed by HM Revenue and Customs and so you need to register with them as self-employed, regardless of your type of fostering and the level of your income from fostering. This includes family and friends foster carers and those that provide respite."

But despite the wittering (because I've enjoyed looking up an area new to me), I don't know the answer to your specific question.
As I said at the start it seems logical - and appears to be backed up by the usual vague GOV.UK guidance at https://www.gov.uk/government/publications/qualifying-care-relief-foster...

Thanks (3)
Replying to FactChecker:
By chicka
28th May 2024 12:03

Thank you for taking the time to look into this!
Yes she has other income and so I realise she will be taxed as normal on that.
Thank you :-)

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