This information is provided in addition to our main section on tax credits under low-income workers.
We give some answers below to the following questions:
Foster carers and tax credits: assisted claims service
Will I get Working Tax Credit (WTC)?
Will I get Child Tax Credit (CTC)?
How does my income from caring affect the tax credits I get?
An ‘assisted claims’ service for foster carers who wish to claim tax credits is available from the end of August 2011.
If you identify yourself as a foster carer on contacting the Tax Credits Helpline to make a claim, you should be offered a call back at a convenient time from a specially trained adviser.
This adviser will be able to talk through your circumstances with you and give advice on how to complete your claim form. This process should help avoid typical problems such as whether or not child tax credit can be claimed for children in foster care, and what hours and income should be declared (including how to declare employment status).
When you phone you will need to tell HMRC that you are a foster carer. They will then give you the appropriate help and advice on how to complete your tax credits claim form.
You can call the Tax credits Helpline on 0845 300 3900.
The helpline is available from 8.00 am to 8.00 pm, Monday to Friday and 8.00 am to 4.00 pm Saturday, (closed Sundays, Christmas Day, Boxing Day and New Year's Day).
To be able to get WTC you need to be in qualifying remunerative work. In a nutshell this requires you to be working or about to start paid work, to be of a certain age and to work for a certain number of hours a week.
The work you do as a qualifying carer will fall under this heading if you are paid under a contract of employment as an employee or you are paid for your care services as a self-employed carer (ie if your caring activities are treated as 'qualifying remunerative work').
There have been occasions when HMRC have incorrectly denied WTC to carers, so make sure you do not miss out.
You should bear in mind that in the case of a joint claim, you and your spouse or partner may have other work apart from caring and this may also be 'qualifying remunerative work' for WTC purposes.
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You can claim CTC if you are 'responsible' for one or more children or 'qualifying young persons'.
You are treated as 'responsible' for your own children but not for a child or young person who has been placed with you by the local authority, and is ‘looked after’ by the local authority. Therefore you can claim CTC for your own children, but not for your foster children.
This also applies if you are a potential adopter but the local authority pays you for accommodation or looking after the child or both.
However, adopters and guardians of children or young persons who have parental responsibility for them (eg under a special guardianship order or a residence order) can claim to be 'responsible' for the child in their care and so can claim CTC for them.
With CTC, it does not matter if you are in work when you claim.
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The amount of tax credits you get will be based on the level of your household income.
Qualifying care receipts paid by local authorities and similar agencies are only taken into account in working out tax credit income to the extent that they are taxable. Therefore, if you use the simplified method for working out your profits for income tax self-assessment, your income from caring for tax credits purposes will be the amount on which you pay income tax. If your care receipts are wholly covered by your tax-exempt amounts, then none of your income from caring is counted in assessing your tax credits entitlement.
Also, if you use the standard method, your caring income for tax credits will be the same as your taxable profits after deductions.
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