As a foster carer you may be entitled to claim tax credits and benefits. The fees and allowances you receive from fostering are normally disregarded for the purposes of calculating your entitlement to benefits. For further information about benefits please visit the government’s website here and for information about tax credits, see here.
You can claim Child Benefit for your own children, or other children that live with you, but not for foster children. To find out more contact the Child Benefit Helpdesk: 0300 200 3100 or click here.
Disability Living Allowance, Personal Independence Payment (PIP) and Carer’s Allowance
Disability Living Allowance is a benefit paid to children and adults under 65 who have care or mobility needs as a result of a disability or ill-health, and is paid on top of any other benefits, tax credits or income you may have. DLA is being phased out for claimants aged 16-64 and replaced by PIP. This is a similar benefit but is based on a different type of assessment. Children getting DLA who reach 16 will be reassessed for either DLA or PIP depending on which part of the UK they live, although eventually all DLA claimants will be reassessed for PIP.
A child under 16 in foster care can still claim Disability Living Allowance, and the allowance is paid to an adult carer if the child is under 16. If you foster a child who receives Disability Living Allowance and/or if you want to claim Disability Living Allowance for a child under 16 that you care for, or for yourself, see here or contact the DWP on 0845 712 3456. Disability Living Allowance and PIP are both non-means-tested, tax-free benefits, which you do not have to declare on your tax return.
You can claim Carer’s Allowance if you care for someone who receives the middle or higher rate of the care component of Disability Living Allowance (or either rate of PIP for daily living) or Attendance Allowance (a benefit for disabled people aged 65 or over). This could be an adult, your own child, or a fostered child, as long as you care for them 35 hours a week, and you earn under £102 net a week (foster payments are ignored as earnings). To claim Carer’s Allowance, email firstname.lastname@example.org or phone 0345 608 4321. Your income from fostering is disregarded for calculating Carers Allowance – but Carers Allowance is taxable, so you would need to declare it on your tax return.
Fostered children are not counted as part of your household when any means-tested benefits are calculated. Equally, the fees and allowances from fostering are not counted as income when calculating any of the following means-tested benefits: Income Support, income-based Jobseeker’s Allowance, income-based Employment and Support Allowance, Housing Benefit and Council Tax Support (these benefits as well as tax credits, and except for help with council tax, are being phased out between 2014 and 2018 and replaced by a new benefit called Universal Credit).
Many foster carers are in a unique position, as you can choose whether to be deemed as working, and claim Working Tax Credit, or not working and claim Income Support.
Income Support is a non-taxable benefit, for people who work less than 16 hours a week but who aren’t required to sign on as unemployed, such as foster carers. The DWP don’t count fostering as work and fostering income does not count as pay for Income Support purposes. If you are fostering a child aged under 16, or a disabled child/young person, not doing other work and not looking for a job, you can claim Income Support in the weeks that you have a child in placement.
In the weeks when you don’t have a child in placement, you have to sign on as unemployed, and claim Jobseekers Allowance (unless you can claim Income Support for another reason, for example if you are a single parent with a child under age 5 or you are getting carers allowance). Any retainer you are paid from your fostering service when you don’t have a child in placement may be treated as earnings and reduce your entitlement to Job Seekers Allowance.
You will not qualify for Income Support if you have savings of more than £16,000 (year 2017/18 and 2018/19. Your entitlement to Income Support will be reduced if you (or any partner) have other employment and/or if you live with a partner who works more than 24 hours a week.
Mortgage lenders tend to look more favourably on Working Tax Credits than on Income Support, so if you have a mortgage, or are looking to get one, it might be worth considering claiming Working Tax Credit rather than Income Support. On the other hand, if you already have a mortgage, you may be able to get help with mortgage payments if you are on Income Support.
Most foster carers will be better off claiming Income Support than getting Working Tax Credits, but make sure you get expert advice, for example from the Citizen’s Advice Bureau, (see below) to ensure you make the right choice in your particular circumstances.
Council Tax Support
You can apply for a reduction in Council Tax directly to your Local Authority. Each Local Authority has their own rules and how much your Council Tax is reduced will depend on a number of factors, including whether you care for a disabled child, and the overall income of your household.
Housing Benefit is for people who pay rent. You must have a low income and savings of less than £16,000 to qualify for this benefit.
The Government have put a cap on Housing Benefit, popularly known as ‘the bedroom tax’ or ‘spare room subsidy’ – meaning that entitlement to Housing Benefit (help with your rent) in social housing, as well as private rented accommodation, is reduced for under-occupancy. This would mean, in the social housing sector, that if you have a bedroom that is technically ‘empty’, your Housing Benefit would be reduced by 14% of your rent for one bedroom, or by 25% if two bedrooms are ’empty’. As foster children are not seen as members of your household, the rooms they use are therefore ‘empty’!
The Government agreed that foster carers are allowed one spare bedroom, in both private and social sector housing – so if you have one room ‘spare’ for fostering, this should have no impact on your Housing Benefit.
Local Authorities also have power to make Discretionary Housing Payments for which foster carers who have two or more ‘spare’ bedrooms (for example, two bedrooms not being used between placements) should be given priority for additional help with housing costs. For more information see page 30 of the housing payments guidance manual. https://www.gov.uk/government/publications/discretionary-housing-payments-guidance-manual This says “Foster Carers are allowed one extra bedroom under the size criteria rules providing they have fostered a child or became an approved foster carer within the last 52 weeks. Some claimants may be caring for siblings, or for two or more unrelated foster children, and require additional bedrooms. National minimum standards for Fostering Services state that a foster child over the age of 3 should generally have their own room. However, the size criteria rules only allow foster carers to have one extra bedroom; therefore, a DHP may be awarded to help cover any reduction in housing benefit due the additional rooms that are required”
As a foster carer on a low income you may be able to claim both Working Tax Credit and Child Tax Credit. They are non-taxable. Child Tax Credit is paid to you if you are responsible for a child or young person who normally lives with you (but not for foster children); Working Tax Credit is based on the hours you work and get paid for. HMRC see fostering as self-employment so foster carers are eligible to claim WTC.
When applying for Working Tax Credit or Child Tax Credit you need to disclose your profit from self-employment. This is the fostering income you receive in excess of your qualifying amount of Qualifying Care Relief. If your fostering income is less than your qualifying amount you have no profit from fostering, and this is the amount (zero) you disclose as profits from fostering when claiming tax credits.
As a foster carer you may, until the full introduction of Universal Credit (see below) choose to claim either Income Support or Working Tax Credit. This would normally be the case if you are single or, if part of a couple, neither of you has earnings from another job. The level of tax credits you are entitled to will depend on your profit from fostering and, if you live with a partner, their earnings, so it is best to get expert advice from the Citizens Advice Bureau (see below) on which route will leave you better off. For further advice you can contact the Tax Credits Helpline on 0345 300 3900 or see here https://www.gov.uk/browse/benefits/tax-credits .
Universal Credit is being phased in and aims to simplify the benefit and tax credits system. In time it will replace 6 existing benefits/tax credits with a single monthly payment. Universal Credit will eventually replace:
- Income-based Jobseeker’s Allowance
- Income-related Employment and Support Allowance
- Income Support
- Working Tax Credit
- Child Tax Credit
- Housing Benefit
At this time, your eligibility to claim Universal Credit depends on where you live and your personal circumstances. https://www.gov.uk/universal-credit
The Government plans to make Universal Credit available in each part of Great Britain during 2016. New claims to existing benefits, which Universal Credit is replacing, will then close down, with the vast majority of claimants moving onto Universal Credit during 2016 and 2017. If you are already receiving these benefits or tax credits, they will continue to be paid until you are moved onto Universal Credit.
Under Universal Credit the same disregard for both fostering fees and allowances will apply. Any fees or allowances you receive from fostering will have no effect on the amount of Universal Credit you are entitled to and will not be treated as ‘earnings’ under Universal Credit.
There is an 8-week concession for foster carers from having to sign on as available for work between placements. This means that if you are a foster carer receiving Universal Credit, it will continue to be paid, without you having to sign on and look for other work, for up to 8 weeks if there is a gap between placements.
Universal Credit will be paid monthly rather than weekly or fortnightly; and it can only be claimed online, with telephone access in limited cases and face to face help to claim in exceptional circumstances. There are no paper based claim forms.
If you are a single foster carer of a child aged 1 or over, claiming Universal Credit, you will have to attend work-focussed interviews (wfi’s) at the Job Centre until the fostered child in your care reaches 16. After that age, you can still get Universal Credit but will have to sign-on as looking for work. The wfi’s are designed to help people prepare for work, but it’s not like ‘signing on’ as unemployed. A fostering couple who claim Universal Credit will have to nominate a lead carer to attend the work-focussed interviews, and the other member of the couple will be expected to look for work, unless not able to work e.g. due to ill-health, where a foster child needs two full time carers, or if you have other caring responsibilities. To find out more about Universal Credit click here. In exceptional circumstances (e.g. where young people have special needs), it will be possible to be treated as fostering until the young person reaches 18, and for neither carer to have to look for work.
For more information about benefits you can go the government’s website here https://www.gov.uk/browse/benefits , the charity Turn2us https://www.turn2us.org.uk/ , or for expert benefits advice in your particular circumstances you can visit your local Citizens Advice Bureau https://www.citizensadvice.org.uk/
The charity Turn2us provides an online benefits calculator. You can upload information about your household and finances and find out which benefits you might be entitled to claim. The benefits calculator is here. http://benefits-calculator.turn2us.org.uk/AboutYou?gclid=CNqIo6z1sscCFcZ02wodyi0LNQ