One of the most common questions asked when people begin to consider fostering is ‘are foster carers self employed?’
Foster carers are considered self-employed, so are responsible for paying their own taxes. Foster carers receive a fostering allowance for each child placed in their care. The amounts vary for each child and how many children are placed with them – but this financial support is classed as an income and can, as a result, be taxed.
All foster carers must be registered as self-employed
Although this may seem like a daunting prospect, registering as a self-employed foster carer is relatively straight forward and can be done online on the HMRC website. Along with this, carers can also qualify for the Qualifying Care Relief Scheme. This scheme allows carers looking after children or adults, to receive some payments tax-free. Thanks to this scheme, you may end up paying very little tax at the end of each year.
Once you have registered as self-employed, you will need to start keeping track of your incomings and outgoings. With every child that comes into your care, you will need to keep a record of their age, relevant dates of when they were in your care and any extra payments you might need to qualify.
Foster carers self-assessments
Unlike being in employment, where your taxes are calculated by your employer, anyone who is self-employed is responsible for paying their own taxes.
This means, if you are a foster carer, you will be required to fill out a self-assessment every year. The self-assessment is used to calculate your earnings throughout the year, which is then used to work out the amount of tax you owe or is owed to you.
The deadlines for completing your self-assessment form are:
Paper submissions – 31st October
Online submissions – 31st January
Tax relief available for foster carer tax return
For all things ‘finance’, our fostering allowance guide will help you to navigate your way through all the facts and figures of becoming a foster carer. Here, you will may be able to work out the personal tax allowance for foster carers.
- Tax for foster carers can give you all the help and support you might need as a foster carer.
- Ready reckoner will help you to calculate the amount of tax and national insurance you will need to pay.
- @hmrcbusiness on Twitter provide help for self-employment.
- The HMRC Facebook page often announces key dates on the financial calendar.
- HMRC also have a YouTube which covers a wide range of topics, including registering as self-employed.
- A handy app to get hold of is the Business Support Tax App. This will give you access to all of the information above and more and can be downloaded either from the Apple iStore or on Google Play.
If you think you would like to consider becoming a foster carer, you can get in touch with us today and request a digital brochure.
