Do foster carers need to fill out a self-assessment?
Foster carers have been treated as self-employed since April 2003, meaning that each year they must fill out a self-assessment. A self-assessment must be completed by 31 January each year. Completing a self-assessment allows HMRC to calculate the amount of tax needed to pay for the previous year.
Fortunately, the government set up the Qualifying Care Relief tax scheme which is available to foster carers. This scheme provides specific relief to care income and allows carers to keep simpler records whilst also making the filing method for tax returns simpler.
On 15 March 2023, the government published that there was going to be an increase in qualifying care relief from 6 April 2023.
This increased the carers' share of a fixed amount from £10,000 to £18.140.
There was also an increase in the weekly tax relief allowance for each child or adult, that is in your care
| 2022-2023 | 2023-2024 |
|---|---|---|
Each child under 11 years of age | £200 | £375 |
Each child 11 years of age or older | £250 | £450 |
Each adult | £250 | £450 |
How to calculate your fixed amount
If there’s more than one carer in the same household, you share the fixed amount.
To work this out, you’ll need to divide the fixed amount by the number of carers in the household.
If you’re a carer for less than a year, you can only use a proportion of the £18,140 fixed amount.
To work this out, you’ll need to:
count the number of days you’ve been an approved carer
multiply the number of days by £18,140
divide the total by 365 - the number of days in a year (or 366 if February has 29 days)
If there’s more than one carer, you’ll also need to divide by the number of carers in the household.
How to calculate your total annual care income
During the year, you will receive payments from the National Fostering Group, to make it easier to calculate your total amount the National Fostering Group will send you an end-of-year statement after the 5th of April. This will include all of your fostering allowance, bridging retainer payments and expenses.
When you have worked out your annual care income you can compare it against your tax threshold.
Will I need to pay income tax?
If your care income is below the tax threshold, then you will not have any income tax to pay
If your care income is above the tax threshold, then you will have to pay income tax on the amount above the threshold.
© National Fostering Group, click here to go to the National Fostering Group website.