CPAG in Scotland Tax Credits Project: Factsheet 17Tax Credits and Foster CarersIntroduction IntroductionThis leaflet considers some issues about child tax credit and working tax credit that are relevant to foster carers. Child tax creditYou can get child tax credit (CTC) for a child you are ‘responsible’ for who normally lives with you. You are not treated as responsible for a child who the local authority is providing with accommodation (this could be through an independent fostering provider) and paying towards her/his maintenance under certain legislation (section 23 of the Children Act 1989 or section 26 of the Children (Scotland) Act 1995). So you can get CTC for your own child. But you cannot get CTC for a foster child if you get foster payments. The amount of CTC you get for your own child is not affected by foster payments unless these are above a certain level (see Income rules below). Private and informal arrangements If you are looking after a child under an informal arrangement not involving the local authority – perhaps your grandchild has come to live with you instead of her/his parent – you may get CTC for that child. This kind of informal arrangement is sometimes referred to as ‘kinship care’. Our leaflet, Tax credits – the basics, outlines the basic tax credit rules and explains how to claim CTC. Sometimes kinship care arrangements are more formal but are still not fostering arrangements eg, you have been granted a residence order or the child is subject to a supervision requirement. These arrangements would not prevent you from getting CTC for the child. Working tax creditTo qualify for working tax credit (WTC), a claimant must be in full-time paid work – called ‘remunerative work’ by the Revenue. The number of hours required per week depends on the circumstances (see below). You count as being in remunerative work if you are either employed or self-employed and working for payment or in expectation of payment. Foster carers are generally treated as self-employed. So if you are working as a foster carer, you can claim WTC if you are working for at least:
See our leaflet, Tax credits – the basics, for more about these rules. It is the number of hours a person normally works that counts. Revenue guidance says that the hours of work a foster carer declares on her/his claim form should normally be accepted. If someone does more than one job, the total hours are added together. So if a foster carer is doing work in addition to foster caring, the hours from the other work can be included. The Revenue says that someone who is self-employed can include not only hours spent providing services, but also those that are necessary for self-employment, such as cleaning the business premises and book-keeping. The general rule is that it is taxable income that is taken into account in calculating your CTC and WTC. This includes income from employment and self-employment. Fostering allowances which qualify for tax relief are ignored: currently up to £10,000 per year (plus £200 per week for each child under 11 and £250 for each child 11 or over) if a local authority or independent fostering provider places a foster child with someone. Further information and adviceCPAG in Scotland Tax Credits Project summary webpages Child
Poverty Action Group in Scotland Email: advice@cpagscotland.org.uk Website: www.cpag.org.uk
CPAG in Scotland’s advice line is only for advisers. If you are having problems with your own tax credit or benefit claim and are in need of advice you should contact your citizens advice bureau or other local welfare rights service. HM Revenue and Customs (formerly the Inland Revenue) Low Incomes Tax Reform Group
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