Will fostering affect my benefits or tax
Regulations concerning taxation, benefits and National Insurance change frequently. Whilst we make every effort for this page to be up-to-date please confirm this information on the relevent government web sites.
"There is a list of questions about your status as foster carers which you will need to find out
What is:
your employment status
your tax position
your pension entitlement?"
Please confirm the information given below with your support worker.
Social Security Benefits
Boarding out payments are designed to reflect the true cost of maintaining a child. As a result they do not have any effect upon your entitlement to benefits or the amount of benefits paid to you. Despite this you should always make your local Benefits Agency office aware that you are a foster carer.
"Specialist" or "professional" fostering schemes almost always include an "element of reward" in the additional payments which they make to carers over and above the boarding out payments. It is very important to make your local Benefits Agency office aware of these payments as soon as possible. Usually placing agencies can provide you with a letter that sets out what amount if any should be considered as an "element of reward" within these payments.
If there is a reward element in any payments you receive it is likely to affect your entitlement to benefit.
Income Tax
Recent changes have been announced regarding the taxation of foster carers. See Inland Revenue Guidance.
Under the new system foster carers are exempt from tax up to a particular limit. This limit is based upon a fixed amount per household and additional weekly amounts for each child fostered.
It is very important that you make it clear to the Inland Revenue what payments you are likely to receive and find out what tax, if any, you are required to pay.
National Insurance
Each fostering agency should be able to provide you with guidance about how any fostering payments can might affect your National Insurance contributions.
Our advice is that you should always make it clear from the start what payments you are likely to receive and find out from the Department of Social Security what NI payments you may be required to pay.
For further assistance on these matters seek advice from your support worker.
