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HMRC internal manual

Tax Credits Manual

From
HM Revenue & Customs
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Eligibility - remunerative work (determining): Foster carers and Kinship carers (Info)

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

If

  • 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

and

  • the Local Authority is making payments for that child’s or young person’s accommodation and maintenance

then

  • 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.

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.