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Rid Your Helping Hands From Some Worries With Our Accountants for Foster Carers

About 45,370 families in England are dedicated to providing foster care. English fostering houses and foster caregivers have reached historic highs. This prompts the country to place a particular focus on foster carers.

In most cases, fostering a kid is a family affair. Still, depending on your situation, you may want to have one member of the family unit be treated as the carer for tax purposes.

When there is no outside income and three kids to take care of, a couple may decide to regard their relationship as a business partnership.

Because of the unique financial circumstances of each family, you may decide it’s best to speak with a professional accountant before moving further.

Caring for a foster kid can be challenging enough without worrying about money, yet doing so is a necessary service.

However, anyone considering a career in foster care should be aware of the tax and other financial implications.

As a matter of fact, you may want to employ a professional, as accountants for foster carers can make sense of the maze of tax requirements that foster caregivers must follow.

We know just the right accountants for the job. Just give them a ring.

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Where To Find Help?

Several organisations may offer foster parents guidance and resources to help them file taxes.

You may get free assistance with your self-assessment tax form by attending one of BIFCA’s (Bradford Independent Foster Carers Association) two annual tax seminars. Our fostering email will keep you posted on upcoming workshop dates.

You also have The Fostering Network, where you can access a wealth of resources, including advice and emotional support from other members.

However, if you want less-time consuming help, Pearl Lemon Accountants is here.

We will be glad to help, and we don’t charge too much for it! Give us a ring. 

Taxes For Foster Carers

All foster parents must file an annual tax return the following calendar year. You’ll need to calculate your tax threshold, which may vary depending on factors, including the number and ages of the foster children you take in.

First, if accepted for the whole tax year, every foster family is eligible for a primary tax credit of £10,000. If additional caregivers are part of the same home, they will still be limited to a £10,000 total allowance.

Each child you take in as a foster child will earn you a tax credit. For example, consider:

  • The weekly allowance for a kid under 11 is £200.
  • For children aged 11 and up, the weekly rate is £250.

The overall tax threshold is calculated by adding the individual thresholds together.

The next step is calculating how much you made through fostering over the year. Fostering allowances, retainer fees, and costs are all excellent examples of income that you should track.

Your final step is to calculate your tax obligations. If you want to know how much of your foster income will be taxed, divide the sum by your tax threshold. You owe no federal income tax with a yearly salary lower than your tax threshold.

It is your responsibility to pay taxes on any amount of compensation that is received that is more than your tax-free level.

Preparing Annual Accounts with Colleague

What We Can Help You With

Aside from the usual tax filing, tax minimising, and deductibles advising, we also offer the following specific services:

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Tax Planning

Our tax experts work to maximise all available tax deductions, credits, and exemptions. If you own a business in the UK, you might face fines from the HMRC if your tax returns aren’t done correctly.

Personal Tax Services

Our experts will guide you through all aspects of your unique tax situation. We provide a specialised service for preparing simple and intricate UK tax returns. With these tax services, we hope to help our clients both increase their wealth and decrease their tax liability.

VAT Accounting

If you hire a VAT accountant, you can be confident that your company will comply with all VAT registration requirements and pay the right amount of VAT to HMRC. If your firm is VAT registered, your accountants will need access to financial documents to file proper returns with HMRC.

VAT is complicated and time-consuming to learn. VAT accountants may aid in these endeavours since they are well versed in the most efficient and accurate methods.

Accounting professionals should be employed by any company selling VAT-taxed products or services.

HRMC Tax Investigations

You should if you aren’t confident handling a tax audit or inspection.

Expected outcomes of investigations include large tax bills, insolvency, and the need for a time-to-pay agreement, voluntary company arrangement, or creditors’ voluntary liquidation.

HMRC will either call or send a letter to inform you about the probe. Initially, you’ll receive a letter requesting certain documents for an “information inquiry.” Later, an inspector will request those same documents during a tax audit.

In most cases, if HMRC has permission, they will contact your accountant. You may face a fine if you refuse to provide information or schedule a visit.

Hiring a tax professional to represent you and answer questions during an audit is a smart move for several reasons.

These are just some examples of the wide range of assistance we provide.

Is there something else you had in mind that wasn’t included?

Just give us a ring.

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Frequently Asked Questions

You will get tax relief for each week the kid or children are in your care, in addition to the expenditures permissible for a foster care provider (which may be much simpler than those for other self-employed individuals).

Foster care expenditures can be claimed in two ways: either as a distinct itemised deduction or as part of an optional rule known as Qualifying Care Relief, but you should still keep comprehensive records of both.

As a result of this regulation, you can lump together all applicable costs and write them off as a single line item.

A wide variety of factors can influence how much tax you owe:

 

  • Number of placements on your care
  • Type of placement in your care, for example, children with special needs, usually entails additional expenses which entitle you to an enhanced fee.
  • If you foster with your partner
  • If you have other sources of money aside from your fostering earnings.

Regarding foster care, there are two primary approaches to determining taxable income and applicable tax rates: the primary method and the profit method. The most straightforward approach is often the most effective. However, this does vary from case to case.

In more complicated situations, like receiving supplementary payments or allowances due to disability or other factors, it may be advisable to seek the advice of a professional accountant to ensure that you pay the minimum amount of tax required and take advantage of all available deductions and exemptions.

For the most part, being a limited corporation doesn’t help with the finances of foster care, but it doesn’t complicate things much either.

Because of the complexity involved in determining whether taxes apply to foster care revenue, it may be prudent to use an accountant even in less complicated cases.

When you allow us to keep track of your finances, you give yourself more time to do your work and please more clients. It's a win-win situation for everyone. Aside from that, you'll also gain financial stability because your assets and liabilities are managed well enough not to cause any trouble for you in the future.

So let our experts work for you, and you won't regret it even a bit.

Book a call today to get started.