Can I claim tax credits?

Updated on 14 November 2017

In this section we provide additional answers to questions regarding entitlement to tax credits.

This information is provided in addition to our main section on tax credits and benefits.

Foster carers and tax credits: assisted claims service

Until recently, HMRC had an ‘assisted claims’ service for foster carers wishing to claim tax credits. This specific service is no longer available but HMRC can offer additional support via their main telephone helpline.

We are currently waiting for more information about this extra support for foster carers claiming tax credits and will update this page in due course.

In the meantime, if you identify yourself as a foster carer on contacting the Tax Credit Helpline to make a claim, the 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 HM Revenue & Customs (HMRC) that you are a foster carer.

You can call the Tax Credit Helpline on 0345 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).

Back to the top

Will I get working tax credit (WTC)?

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 (i.e. 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.

There is more information in the 'tax credits and benefits section'.

Back to the top

Will I get child tax credit (CTC)?

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 (e.g. 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.

New rules apply to child tax credit from 6 April 2017 which limit the number of child elements you can receive to a maximum of two children. Children born before 6 April 2017 are not affected by the change and there are some exceptions, including one for non-parental care arrangements, that mean you can get more than two child elements even for children born after 6 April 2017.

There is more information on tax credits generally including the 2 child limit in the 'tax credits and benefits section'.

Back to the top

How does my income from caring affect the tax credits I get?

The amount of tax credits you get will be based on the level of your household income (the combined income of you and your partner if you have one).

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.

There is more information in the 'tax credits and benefits section'.

Back to the top

How will universal credit affect me?

Tax credits will eventually be replaced by universal credit (UC). UC is being rolled out slowly across the UK. In some areas, new claims for tax credits are no longer possible. Whilst most existing tax credit claimant ill not be affected by UC until 2019 onwards, some changes of circumstances may mean tax credit claimants have to claim UC instead. You can find out more in our 'universal credit section'.

Under tax credits foster carers are treated as self-employed, but under UC they will not be – see GOV.UK for confirmation of this. Any allowances and fees received by foster carers are fully disregarded when calculating UC.

DWP produced a briefing note about UC for foster carers in 2011 which gives some interesting background.

Back to the top