In the UK, Foster carers are classed as self-employed and must return their own tax forms. Foster Carers can benefit from a fixed-tax exemption shared equally among approved carers in the household. Plus, you’ll receive tax relief for every week a child is in your care.
How much do foster carers get paid at Family Care?
At Family Care, we believe that our amazing carers deserve to be compensated fairly for their important work.
That’s why we offer a combination of a ‘boarding-out’ fee, which is based on the government’s national minimum rates (between £154 – £233 per week), and a professional fee.
This means our foster carers can earn between £407 – £750 per week, depending on the age and needs of the young person they care for, and the type of fostering provided.
For children with complex needs and/or disabilities, foster careers may be entitled to enhanced payments. Enhanced fostering allowances can go as high as £750 per week.
How much tax do foster carers pay UK?
You should have registered as self-employed when you started to foster and you will need to file tax returns.
In your tax return, you’ll be able to claim:
- a tax exemption of up to £18,140 per household
- tax relief for every week you foster a child
Here’s an example to show you how it works:
Laura fosters a 14-year-old for the whole year and an 8-year-old for 10 weeks. She doesn’t have to pay tax on the first £25,000 she earns from fostering. It’s easy to see how this tax relief can add up and make a real difference for foster families.
Remember, it’s your responsibility to register as self-employed and pay income tax and national insurance.
It’s important for foster carers to keep accurate records of their income and expenses related to fostering, as they will need to report this information on their tax return.
Additionally, they may be eligible for other benefits and support, so it’s advisable to seek guidance from HM Revenue and Customs (HMRC) or a tax advisor to ensure compliance with tax regulations and to take advantage of available tax relief and allowances.
Will fostering affect my welfare benefits?
It’s crucial to inform your local authority or benefits office when you become a foster carer so that they can provide guidance on how fostering may affect your specific welfare benefits. They can assess your individual circumstances and provide accurate information on how your benefits will be adjusted, if necessary.
Additionally, it’s advisable to seek advice from a financial advisor or tax professional to ensure you understand the financial implications of fostering on your overall income and benefits. Laws and regulations related to benefits can change, so it’s essential to stay informed about the most current rules and guidance.
Do foster carers pay National Insurance?
Foster carers in the United Kingdom may have to pay National Insurance Contributions (NICs) depending on their individual circumstances. Here’s how National Insurance Contributions apply to foster carers:
Foster Carers Who Are Considered Self-Employed: In many cases, foster carers are considered self-employed for tax purposes. If you are considered self-employed, you may be required to pay Class 2 and Class 4 National Insurance Contributions on your fostering income if your earnings exceed certain thresholds.
Class 2 NICs: These are flat-rate contributions that self-employed individuals may be required to pay if their profits from self-employment are above a certain amount. As of my last knowledge update in September 2021, there was a minimum threshold for Class 2 NICs. If your fostering income exceeds this threshold, you would need to pay Class 2 NICs.
Class 4 NICs: These are calculated based on your overall self-employed earnings and are typically paid if your profits are above a certain threshold. Like Class 2 NICs, Class 4 NICs may apply to foster carers if their total self-employed income exceeds the threshold.
National Insurance Credits: Foster carers may also be eligible for National Insurance Credits (NICs) to help protect their state pension rights. These credits can help ensure that foster carers receive credit for their contributions to the National Insurance system, even if they are not liable for Class 2 or Class 4 NICs.
It’s essential for foster carers to understand their tax and National Insurance obligations. The rules and thresholds related to National Insurance can change, so it’s a good idea to consult with HM Revenue and Customs (HMRC) or a tax professional to ensure you are complying with the most up-to-date regulations and to determine whether you are required to pay National Insurance Contributions based on your specific income and circumstances.
Could You Foster?
The shortage of foster carers in the UK greatly affects vulnerable children.
This can result in children being placed far from their loved ones and being separated from their siblings, as well as their school and friends.
Did you know that historically, 70-80% of foster placements have been within 20 miles of the child’s home? While this is beneficial for many children who can maintain their school and friendship groups, it also means that 20-30% of placements are further away.
For children coming to live with our foster families at an average age of 10, a change of school is often inevitable. However, we are dedicated to finding families in local areas with high demand to minimise disruptions.
If you live in the Northwest or the Midlands and are interested in exploring becoming a foster carer, we are here to support you every step of the way.
Get in touch with us by completing our short inquiry form online, or call us at 0800 5 677677.
There is no obligation for anything more than a chat.
Keep in mind that your role as a foster parent is incredibly valuable, and your dedication to the well-being of these children will make a lasting impact on their lives. At Family Care, we’re here to support you every step of the way. You’ll find a supportive and caring community that puts the needs of our foster families and children first.