Myself and my partner were talking about our impending income tax bill.
Both of us aren't accountants.
By a considerable distance, neither of us are accountants.
We use a small family-type firm of accountants whose office is about 300 miles away from where we live.
Sounds a bit odd, but when we joined Blue Sky they recommended them to us as a trustworthy and knowledgable firm of accountants who a) understand the particulars of the tax breaks that come with the fostering allowance b) know how to explain it to foster carers c) are accesible and d) are nice.
We've been with them for over two decades.
What I'm saying is that the things I can tell you about the income from fostering and how it's taxed is merely my own experience and a layperson's understanding of how it works.
The reason I'm willing to try to explain, for the benefit of people who are considering getting in to fostering, and maybe people who are already foster carers but a bit hesitant about how it works, is because I find we foster carers are often a bit embarrased abourt the money side of for doing something that is basically a calling.
Everyone has to eat.
In a nutshell it seems that the tax collectors have been instructed by 11 Downing Street (the Chancellor of the Exchequer) to treat the money that foster parents are paid as an "allowance".
Not a payment.
Not a salary or a standard form of income that's subject to what the public know as "Income Tax".
An "Allowance" seems to be taxed differently from an "Income".
The reason me and my other half were discussing it is that a letter dropped onto our doormat from HMRC (His Majesty's Revenue and Customs) telling us how much tax we owed for the last 12 months in question.
The amount struck me as too small.
I phoned our accountants and they assured me the bill matched our accounts they sent to the Inland Revenue.
In plain English, succesive governments are so much in need of foster carers they all but waive income tax from the allowance.
My own personal theory as to how this comes about is tied up in this simple notion. Foster parents have a foster child in their home, if fostering were classed as a job of work, the foster parents would be 'working' 24 hours a day, 7 days a week. We don't clock off at 5.00pm and chill. We're on call. It's rare but if there's a need for support in the night you do it.
So if fostering was classed as 'employment' we'd be doing a 168 hour week. Of course, it's nowhere near like that, but if you argued it in a court or a tribunal, you waltz it.
So if our remuneration from fostering for a 12 month period is £20,000 and our hours are (technically) 24/7 every week, our hourly 'pay' would be approximately £3 per hour.
A long shortfall on the national living wage...
The National Fostering Group offers this advice:
In general, foster carers’ pay isn’t subject to income tax. This is because the Qualifying Care Relief tax scheme is quite generous, so you won’t normally have any taxable profit. However, you will still need to do a simple calculation at the end of each tax year to see what your tax threshold is for that tax year and whether or not you have gone over it. If you have, this is called taxable profit and you may have to pay tax.