In the recent Spring Budget 2023 announcement, the Chancellor, Jeremy Hunt, shared significant changes to the foster parent tax relief system.
Here at FCA we are delighted at this much welcomed news and that the Government has recognised the amazing job our foster families do. This is the first time qualifying tax relief levels have increased since its introduction in 2003.
Here’s how these changes will affect you:
- From the 2023 to 2024 tax year, foster parents will receive a considerable tax relief increase on 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.
By increasing the level of tax relief it means foster parents are not taxed on income which is intended to be spent on the care of the child or young person they are looking after.
Whilst this is fantastic news for all foster parents, those who care for siblings will benefit the most from these changes.
What is Qualifying Care Relief?
Qualifying Care Relief allows foster parents to receive payments from their fostering agency up to their tax threshold without being liable to pay any tax. Previously, foster parents 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, with yesterday’s Spring Budget 2023 announcement, this relief has now increased.
The changes in tax relief for foster parents:
To help understand just exactly how this news will benefit our foster parents, below shows the previous rates of Qualifying Tax Relief for fostering families, along with the new announced rates:
Post-Spring 2023 budget announcement:
- A fixed amount of £10,000 for each household for a full year, plus:
- Weekly amounts for children in your care:
- £200 for children under 11
- £250 for children aged 11 or older
From the 2023 to 2024 tax year:
- A fixed amount of £18,140 for each household for a full year, plus:
- Weekly amounts for children in your care:
- £375 for children under 11
- £450 for children aged 11 or older
With this increase in tax relief, it means foster parents will soon be able to keep the majority – if not all – of the money they receive from making a difference and changing the lives of the children and young people within their care.
What’s more, we regularly review the fees that we pay to foster families and make every effort to take in to account the rising cost of living and impact of inflation, as well as paying our existing bonuses and benefits.
Don’t let finances be the barrier in providing children and young people a happy, nurturing home.
Are you thinking of fostering?
Download the FCA’s complete beginner’s guide to fostering a child. Find out more on how to foster a child and the process involved.
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