Children's Handbook Scotland 2020/21Chapter 8: Children living with foster carers2. Benefits and tax credits for foster carers Tax credits
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Tax credits
Child tax credit
You cannot get CTC for a child you are fostering if you are getting a fostering allowance.1Reg 3(1) r4 CTC Regs You may still qualify for CTC for other dependent children who are not fostered.
 
1     Reg 3(1) r4 CTC Regs »
Working tax credit
Note: because of the introduction of UC, you cannot usually make a new claim for tax credits but currently you can continue to get tax credits, and renew your claim at the end of tax year, if you are already entitled.
In order to get working tax credit (WTC), you have to be in ‘qualifying remunerative work’. This means that you are working (either employed or self-employed) for a certain number of hours a week and fall into at least one of five categories (see below). Fostering should count as self-employed work for tax credit purposes, provided you are paid, and so you may be able to get WTC.1Reg 4 WTC(EMR) Regs If you are a foster carer and you are refused WTC on the basis that you are not self-employed, seek advice immediately.
You may be able to get WTC if:
    •you are aged at least 25 and you work at least 30 hours a week; or
    •you are aged at least 60 and you work at least 16 hours a week; or
    •you are a single claimant, have a dependent child, and you work for at least 16 hours a week. The child you are fostering does not count as dependent for this purpose, but if you have a child of your own, s/he does count; or
    •you are a couple, have a dependent child and your combined working hours are at least 24 a week. The child you are fostering does not count as dependent for this purpose, but if you have a child of your own, s/he does count. If you both work, one must do at least 16 hours a week. If only one works, s/he must do at least 24 hours a week. Note: if you are a couple with a dependent child and the non-working partner is incapacitated, a hospital inpatient, in prison or entitled to CA, you can qualify if you work at least 16 hours a week; or
    •you have a disability which puts you at a disadvantage in getting a job, and you work for at least 16 hours a week.
Fostering payments up to £10,000 a year, plus £200 a week for each child under 11 and £250 a week for each child aged 11 or over, are not liable for tax, according to the HMRC tax relief scheme. Fostering payments that come below this level are therefore ignored as income for tax credit purposes.2Reg 19 Table 6 para 9 TC(DCI) Regs HMRC produces a helpsheet (HS236) on the tax relief scheme (available at gov.uk).
 
1     Reg 4 WTC(EMR) Regs »
2     Reg 19 Table 6 para 9 TC(DCI) Regs »