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Self Assessment- Foster Carer Couples

Sole Trader or Partnership

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Anyone that deals with Foster Carers Tax Returns? How do you deal with Foster Carers where, for example, the wife is the main approved foster carer and the husband is a secondary carer (he has to be since he lives in the same home but works full time under PAYE). Do you register just the wife as a sole trader? Or do you register them both as a partnership? - sometimes payments made in only main carers name, sometimes both.  HMRC's available guidance on the matter is sparse and vague, and no one on their helplines can answer.

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By memyself-eye
23rd Sep 2020 10:59

I have a couple.
I split the income according to which 'parent' does the bulk of the work - usually the wife, especially if the husband works elsewhere. Their respective share of the income I submit individually as self employed income being sure to answer the 'foster carer' question on the return. If the husband is (say) a self employed electrician also then he will have two forms of self employment. The wife's share rarely triggers any tax, so a marriage allowance transfer helps any increase in the husbands tax.

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Replying to memyself-eye:
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By elena89
23rd Sep 2020 13:17

Thanks, do you do this along with the partnership return?

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By mbee1
23rd Sep 2020 11:43

I assume you're aware of the Qualifying Care relief rules. Very few end up paying tax.

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Replying to mbee1:
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By elena89
23rd Sep 2020 13:23

Yeah, I appreciate the majority don't pay tax so there isn't any tax being 'avoided' by doing it as a sole trader rather than a couple - but just want to make sure I am doing correctly. If I only register a couple as a sole trader when there's no tax to pay, but then perhaps register a couple (where both have no other income) to use two personal allowances to avoid tax then I'd be concerned that could be viewed as tax planning with a view to tax avoidance. I'd feel much more comfortable having a blanket treatment of couples - but I don't feel HMRCs guidance really is clear enough as to what it is.

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By elena89
23rd Sep 2020 13:32

Also worth mentioning that the alot of clients agreements with Agencies refer to the main carer as 'main foster carer' and the partner as 'secondary carer'.
Perhaps the agencies are being careless with the wording but maybe they aren't - is there any relevance to the omission of the word 'foster' in 'secondary carer'.
Absolutely overthinking no doubt!

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