Foster Carers (Hansard, 26 October 1994)

§ Ms Coffey
To ask the Chancellor of the Exchequer if allowances paid to local authority foster carers are non-taxable and are not regarded as income.

§ Sir George Young
To the extent that payments made to a foster carer do no more than meet the actual costs of caring for someone, no tax is payable. But if a profit arises on payments made to reward the foster carer's services in providing care, this profit is taxable.

§ Ms Coffey
To ask the Chancellor of the Exchequer if foster carers in receipt of boarding-out allowances and who do not receive an additional fee are not classified as self-employed.

§ Sir George Young
It will depend on whether or not an individual is self-employed, in particular the way in which the caring is organised. Whether a foster carer is self employed or not, to the extent that payments received do no more than meet the actual costs of caring, no tax will be payable. If a profit arises on payments made to reward the foster carer's services in providing care, this profit is taxable.
Where basic boarding allowances paid to foster carers do no more than re-imburse actual costs, no taxable profit arises.
This is reflected in National Foster Care Association guidelines, published in its leaflet NFC 2008, which has been agreed with the Inland Revenue.