In the recent Spring Budget 2023 it was announced by the Chancellor Jeremy Hunt that there were substantial changes being made to the foster carer tax relief system. Please read below how these changes will affect Swiis foster carers.

Swiis Foster Care are delighted that the Government have recognised the amazing job our foster carers do every single day to enhance the outcomes for children and young people looked after in foster care.  Qualifying tax relief levels have not been increased since its introduction in 2003, therefore this news is invaluable to the fostering community.

Here’s how these changes could affect you:

  • For the tax year period 2023 to 2024, foster carers will receive a considerable increase in their tax relief increase against their fostering allowance.
  • This is for both the fixed annual total of Qualifying Care Relief (QCR), as well as the weekly amount.
  • Also announced is the positive news that the rates of QCR will increase each tax year in line with inflation.
Spring budget 2023

By increasing the level of tax relief, it means foster carers are not taxed on income which is intended to be spent on the care of the child or young person they are looking after.

What is Qualifying Care Relief?

Qualifying Care Relief allows foster carers to receive payments from their fostering agency up to their tax threshold without being liable to pay any tax. Previously, foster carers received a £10,000 tax allowance on their annual fostering income, plus an additional weekly tax relief for each child in their care – known as Qualifying Care Relief.

However, following the Spring Budget 2023 announcement, this relief has now increased.

The changes in tax relief for foster carers:

To help further understand how this news will benefit Swiis foster carers, we have outlined below the previous rates of Qualifying Tax Relief for fostering families, along with the revised rates:

Following the spring budget announcement (from the 2023 to 2024 tax year):

  • A fixed annual amount of £18,140 tax free will be applied for each household plus:
  • Weekly amounts for children in your care:
    • £375 (per week) for children under 11
    • £450 (per week) for children aged 11 or older

Pre-Spring 2023 budget announcement: the following tax benefits were applied:

  • A fixed amount of £10,000 tax free for each household for a full year, plus:
  • Weekly amounts for children in your care:
    • £200 (per week) for children under 11
    • £250 (per week) for children aged 11 or older

The increase in tax relief, will enable foster carers to be able to keep the majority  (if not all) of the weekly payment they receive from Swiis Foster Care.
*please note any other earning outside of Swiis Foster Care will be taxed as normal.

Foster fee examples following the increased tax allowance:

Standard fostering allowance examples

Child/young Person – standard needs

A foster carer who has one child aged 13, may receive an average of £460 a week, which with HMRC tax relief applied to fostering will equate to an annual net income of over £23,920 per annum.

Due to HMRC Tax Relief for Fostering, all of this income would be TAX FREE. Comparing this to an employed person on PAYE the take home fee equals that of an annual salary over of over £29,000.00 per annum.

Two unrelated Children or young people – standard needs

A foster carer that has two unrelated children aged 11 and 14, in placement, may receive an average of £460 a week per child and would subsequently equate to a potential income of approximately £48,000.00 per year. Due to the updated HMRC Tax Relief for Fostering, all of this income would be TAX-FREE. Comparing this to an employed person on PAYE your take home pay equals that of an annual salary of over £66,000.00 per annum.

Two siblings Children or young people – standard needs

A foster carer that has two sibling children aged 11 and 14, in placement, may receive an average of £430 a week per child and would subsequently equate to a potential income of approximately £44,720.00 per year. Due to the updated HMRC Tax Relief for Fostering, all of this income would be TAX-FREE. Comparing this to an employed person on PAYE your take home pay equals that of an annual salary of over £66,000.00 per annum.

Additional needs fostering

Foster carers who care for children and young people who display complex challenging behaviours will receive an enhanced weekly fee of up to £765.00 per week. In such instances, we will only ever place 1 child at a time to ensure the highest level of support is provided to the carer and young person. For this type of placement, the foster carer will have no other children living in the home.

As an example, a foster carer who has one Enhanced Fostering placement (solo) child aged 13, will receive an average of £765.00 a week, which with HMRC tax relief, equals a potential net income of approximately £40,000.00 per year.

Due to HMRC Tax Relief for Fostering, all of this income would be TAX FREE. Comparing this to an employed person on PAYE the take home fee equals that of an annual salary over of over £53,000.00 per annum.

If you would like further clarification please contact Swiis on the below number, email or WhatsApp