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Self-Assessment Guidelines for Foster Carers

For foster carers who have provided care during the tax year of 6th April 2022, to 5th April 2023, the deadline to file your self-assessment tax return is fast approaching on 31st January 2024. It’s necessary to submit your tax return and settle any taxes owed by this date to sidestep any late fees and accrued interest.

Understanding Payments on Account

Payments on account are advance payments towards your tax bill for the next year, based on your last year’s tax liability. These are required if your tax bill exceeds £1,000 and are due in two halves: the first by 31st January and the second by 31st July.

For example:  

2022/23 Tax and National insurance due by 31st January 2024 = £4,000

First payment on account for 2023/24 (50% of £4,000) = £2,000

Total due by 31st January 2024 = £6,000

Total due by 31st July 2024 (remaining 50%) = £2,000                           

Should your tax liability for the following year be lower, adjustments to these payments can be made. Notably for foster carers, due to the increase in qualifying care relief allowances for the year 2023/24, many will find themselves with a reduced or non-existent tax bill for that year, and consequently, should adjust their payments on account to avoid overpayment.

National Insurance Contributions

For full state pension eligibility, you need to accumulate 35 years of complete National Insurance contributions or credits. Foster carers benefit here, as each year of fostering can contribute to their National Insurance record. Depending on the profit levels from fostering, you may either pay National Insurance or receive credits by completing Form CF411a.

If your fostering profits for the 2023 tax year do not exceed £6,396, you are not required to pay Class 2 National Insurance through your tax return. Instead, you can obtain National Insurance credits by submitting Form CF411a. However, those who are fostering and also receiving benefits like Child Benefit, Income Support, Carers Allowance, or Universal Credit will automatically receive National Insurance credits without needing to fill out the form.

It has come to our attention that some foster carers may have been mistakenly informed by HMRC that they do not need to file a tax return for the 2022/23 tax year. If you have received such notification or if there’s any doubt regarding your filing requirement, it’s recommended to seek confirmation.

Don’t hesitate to reach out to our specialised foster care team.

For those who need help with their tax returns or have queries about their filing obligations, BK Plus are ready to help. Reach out for guidance and support in managing your tax responsibilities by calling us on 0121 828 6058 or email btax@bkplus.co.uk.

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