Foster care and tax credits

Foster Care special rules

Foster carers can be eligible for working tax credit on the basis that they expect to be paid for the hours they work and therefore these are ‘qualifying remunerative hours’ for working tax credit. This is so even if taxable income is nil, or very low, due to the special tax rules for foster care.  Tax credits are means tested, based on taxable income. So a low taxable income means that you could receive a significant tax credit award. Foster carers may also be eligible to claim child tax credit for their own children, but not for any fostered children.

One practical issue is that the tax credit application pack and renewal pack say that self-employed people need to include details of their income and Unique Tax Reference number (UTR). As a foster carer, your taxable income may be nil. It is OK to put ‘nil’ on the form. As regards the UTR, you will only have a UTR if you have registered as self-employed. If you have not registered as self-employed, perhaps because you have no tax liability, and therefore do not have a UTR, you may enter the date you became a foster carer and leave the UTR box blank. If you are asked to explain why you have done this, you should explain that you are a foster carer and have no taxable liability.

For more about tax credits see http://taxaid.org.uk/info/tax-credits. Or if you have a problem with tax credits, such as an overpayment, see the TaxAid tax credit problem solving guide – http://taxaid.org.uk/info/tax-credits/tax-credits-problems

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