At evolve we are mindful of the financial burden that sometimes comes with being a foster carer and supporting others. There are some very helpful financial benefits to being a foster parent, which could make a considerable impact for you and your family at a time when saving each pound and pence is extremely important. Here we aim to guide you along the right path when it comes to taking care of the financial aspect of caring, hopefully leaving you with even more precious time to spend with your family.
Managing your finances can also be stressful, so having peace of mind when it comes to money issues can be a great relief, giving you and your family a greater quality of day-to-day life.
Foster carers could benefit from the following financial schemes:
Qualifying Care Relief and Income Tax
When you join evolve we make sure you receive a therapeutic fostering allowance that foster parents are entitled to and reflects your hard work, this can up to £700 per week per child or young person. This is up to £36,400 per year (roughly £3,000 per month), depending on your skills, experience and also the age and needs of the child or young person placed with you. This pay will help with the day-to-day costs of looking after the child or young person, but it is also a professional fee to recognise and reward a foster parent for their hard work and commitment. For the majority of carers this pay will also be tax free due to the government’s Qualifying Care Relief.
The Qualifying Care Relief scheme covers foster care, parent & child care, shared lives care and staying put care (children and for young people who are fostered after the age of 18).
The scheme is a generous tax break that ensures that you won’t normally have any self-employed taxable profit if your annual fostering income is below a qualifying care relief figure of £20,400 for children under 11 or £23,000 for over 11. This could mean you won’t need to keep complicated accounts, saving you time and money. At the end of each tax year you will need to submit your calculations to decide what the following years’ tax threshold, or qualifying amount is. By exceeding the above thresholds you are likely to need to pay tax. If you are fostering one child or young person only, this may be relatively low as you only pay tax on income above the thresholds depending on the needs of the child or young person. For children with enhanced or complex needs, your therapeutic fostering allowance will be higher overall and if you support the child or young person for the full year, then the balance above the threshold will be higher overall.
Please see the link below on the qualifying care relief with details of the fixed amount £10,000) and amounts per each child or young person. There is also information on the approach to calculating your tax under the simplified or profit method.
Housing Benefit & Universal Credit
Your fostering pay (or ‘allowance’) is not likely to affect any housing tax benefits or Universal Credit if you are claiming one or both of them. It is disregarded when included your calculations, so depending on any other income streams, this could leave foster carers free to claim these two valuable benefits.
Carer’s Allowance & Disability Living Allowance
If you are already claiming either or both of these for your own child, then your fostering allowance should not affect these either.
Working Tax Credit & Child Tax Credit
You may be entitled to these if you also have children of your own, as foster carers count as being self-employed.
DLA (Disability Living Allowance)
Foster parents can make a claim for this on behalf of a foster child or young person in their care, that has a disability and is under the age of 16. Your local authority may help you arrange plans and budgets for the DLA award, including the possibility of providing financial help with any modifications you might need with your home.
Council Tax
Any fostering allowance is disregarded for the purposes of a Council Tax reduction, as opposed to standard income, freeing you up to apply. Depending on which local authority you reside under, being a foster parent might mean you are eligible for full Council Tax relief or a tax reduction, but this isn’t the case everywhere. If you are in Kent, East London, South London or the South East and thinking of fostering, then contact us to find out more.
Before you seek financial help, please take care to consult with other family members, your local authority, HMRC and other financial bodies, as things are always changing. Our knowledgeable support team are always available to help our foster parents every step of the way.
