How To Claim Working Tax Credits As A Foster Carer

Can Foster Carers Claim Working Tax Credits?

Working Tax Credit (WTC) is a payment that’s provided to help boost the income of working people who are on a low income.

People can apply to receive Working Tax Credit whether they’re working for an employer or self-employed, however, they must be paid for the work they carry.

How Do I Renew My Foster Carer Tax Credit?

If you’re receiving Working Tax Credit, then HMRC will provide you with a renewal pack, which will tell you how to renew your tax credits.

If your pack has a red line across the first page and asks you to ‘reply now’, then you have until July 31st, 2019, to submit your renewal.

If you miss the deadline, your tax credits payments will stop. If this happens, you will be sent a statement and will have to pay back the tax credits you’ve received since April 6, 2019.

Am I Eligible for Working Tax Credit As A Foster Carer?

Foster caring is currently classed by the Department for Work and Pensions (DWP) as a form of work, which can involve anything up to 30+ hours a week.

Your business profits will be taken into account when considering your WTC entitlement. Foster carers aren’t required to provide proof of their earnings.

Foster carers aren’t obliged to inform the DWP if they have don’t have any placements, providing they are still:

  • Continuing to attend training
  • Having regular supervision with their social worker
  • Being offered to foster placements

Can Foster Carers Claim Child Tax Credits For Foster Children?

You can claim child benefit for your own children, or other children that live with you, but not for foster children.

How Does Tax Credit Renewal Work For Foster Carers?

Based on our experience of working with foster carers over the years, we know it can be confusing to work out which figures to enter on the renewal form.

  • Always make sure they are the same as the figures you put on your tax return for the 2019 tax year
  • It’s also worth remembering that WTC is always being paid in arrears. This example explains all –

You submit your Working Tax Credit renewal on July 31, 2018 and state that your taxable income is £5,000 for the tax year ended April 5, 2018.

You will be paid WTC based on an income of £5,000 until you submit your 2019 tax credit renewal (by July 31, 2019).

Your 2019 tax credit renewal shows £15,000 income for the tax year to April 5, 2019. This means that DWP have overpaid you for the months April 2018 to July 2019 (15 months) – they were paying you based on the income of £5,000 per annum when your actual income is £15,000 per annum.

DWP will want the overpayment paid immediately if possible, but you can negotiate repayment terms.

Note – Your taxable income can go up by £2,500 year on year before your entitlement to WTC is reduced.

You can read more about foster carer benefits in our Fostering Tax Credits and Benefits Guide

If you are in doubt about your renewal figures or would like general help and support with your Working Tax Credit arrangements, get in touch with us today, for free, impartial advice.

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