Eligibility - remunerative work (determining): Foster carers and Kinship carers (Info)
You should check the other guidance available on GOV.UK from HMRC as Brexit updates to those pages are being prioritised before manuals.
Treat foster carers and kinship carers as being in remunerative work. The number of working hours declared on the claim form should be accepted.
Normally a fostering arrangement will be with a Local Authority (LA), who may pay an allowance to the carers for the maintenance of the foster child. The allowance may also include things such as any special requirements of the foster child and the cost of wear and tear on the home.
Many foster carers are classed as being self-employed. Foster Care relief provides generous exemption from income tax for fostering income. This will result in many foster carers having ‘nil’ income for tax credits purposes.
Child Tax Credit
Claiming for a looked after child or young person
- a child or young person has been placed with a foster carer or kinship carer by a Local Authority under part 3 of the Children Act 1989, part 2 of the Children (Scotland) Act 1995 or part 4 of the (Northern Ireland) order 1995
- the Local Authority is making payments for that child’s or young person’s accommodation and maintenance
- the foster carer or kinship carer is not classed as being responsible for that child or young person for tax credits. This means that they cannot include the child on their claim.
A customer who is not receiving monetary support for the child may be able to claim tax credits and should include the child on their claim.
Note: From 6 April 2017, customers will only get the Family Element of Child Tax Credit where they are responsible for a child or children born before that date.
Note: The individual child element of Child Tax Credit will no longer be awarded for third and subsequent children or qualifying young persons in a household, born on or after 6 April 2017, unless it meets the exception criteria.
Note: If you are dealing with a claim where an exception marker has been applied to any of the children/young persons included in the claim or the customer is reporting a change relating to an exception contact the Exception Team (This content has been withheld because of exemptions in the Freedom of Information Act 2000) . (This content has been withheld because of exemptions in the Freedom of Information Act 2000) For how to check if the exception marker has been applied, use TCM1000314.
Claiming for a child who is not looked after by the Local Authority
If a child or young person (who is not looked after by the Local Authority) is living with a foster carer or kinship carer under informal arrangements, the foster carer or kinship carer can be classed as being responsible for that child or young person for tax credits. This is even if they are receiving some payment for the child or young person out of public funds.
This is because local authorities have a duty to help any child in need in their area, including those living with parents. Provided that the foster carer or kinship carer receives this payment on the same basis as any child in need, and the child or young person was not placed by a Local Authority, then the foster carer or kinship carer can be considered responsible.
Claiming for a young person the foster carer or kinship carer is considering adopting
A foster carer or kinship carer may be able to claim for a looked after child or young person placed with them by a Local Authority for adoption provided that
- the Local Authority is not making a payment in respect of the child’s or young person’s accommodation and/or maintenance under Section 23 of the Children Act 1989, Section 26 of the Children (Scotland) Act 1995, (now in regulation 33 of the Looked after Children (Scotland) Regulations 2009) or Article 27 of the Children (Northern Ireland) Order 1995.
If the customer is not sure whether any of the above conditions apply, they should contact their Local Authority social worker, who will be able to tell them.