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Foster Carers

What can local authorities / foster care agencies do to help foster carers with the new tax exemption?

1. To enable carers to calculate their income tax exemption threshold. At the end of the financial year provide to each foster carer:

a) A list of the children in place with them during the that year to include the following information:

• Date of birth.
• Date placement started.
• Date placement ended (unless placement ongoing at end of financial year).

b) A statement setting out the total of all payments made to them in respect of foster care during that financial year.

2. To enable carers to make an accurate comparison of total receipts to threshold. Ensure that the total receipts from foster care figures included in statement 1(b) above are correct by:

a) Having in place a system to record any overpayments / underpayments made to carers and track the collection / payment of these.

b) If overpayments of fees and / or allowances occur

• Where repayment / collection has been made in the year do not include either payment or repayment in statement 1(b) above.
• Where collection / repayment is outstanding at the year end do not include payment in statement 1(b) above.

c) If underpayments of fees and / or allowances occur

• Where payment is made before the year end include in statement 1(b) above.
• Where payment is not made until after the year end include in statement 1(b) above.

EXPLANATION AND ADVICE RE STATUTORY REQUIREMENTS OF SELF EMPLOYMENT

Who must be notified How to do this etc.

HELP WITH STATUTORY COMPLIANCE

Obtaining relevant forms

Completing forms

Submitting forms

etc.

ADVICE ON TYPES OF SELF EMPLOYMENT

Sole trader or partnership, advantages and disadvantages in different situations.

ADVICE ON THE INTERACTIONS OF SELF EMPLOYMENT

With income from other sources (employment, pensions, benefits, savings interest, dividends etc.)

ADVICE ON SOME OF THE IMPICATIONS OF SELF EMPLOYMENT

On benefits (availability, entitlement, amount) National Insurance (Class 2 and 4)

ADVICE ON RECORD KEEPING PREPARATION OF ACCOUNTS ADVICE ON ALL AREAS OF TAXATION PREPARATION OF TAX RETURNS TELEPHONE SUPPORT ATTENDANCE AT GROUP MEETINGS MEETINGS AT OUR OFFICES NEGOTIATIONS WITH INLAND REVENUE NEGOTIATIONS WITH CONTRIBUTIONS AGENCY INLAND REVENUE H. M. CUSTOMS AND EXCISE

The practice has been involved in Foster Care for a number of years and has built on the experience of Susan Hancock who in 1990 assisted the local Shrewsbury MP to obtain confirmation that payments to foster parents were outside the scope of VAT.

LOCAL AGREEMENTS

These agreements have been negotiated with local tax districts where we have a number of clients whose files are held in that district.. These agreements reduce the record keeping requirements for our clients only, and by filing returns under the agreements this means there is less detail disclosed on the return and therefore there is less chance of the revenue making an enquiry into the carers NATIONAL WORKING PARTY More recently Nigel Hinton has been a member of the National Working Party set up by the DOH and IR looking at the taxation of Foster Care payments.

SOCIAL SERVICE DEPARTMENTS

We have worked with and done presentations on accountancy and tax related issues with various Social Services Departments including those in: Powys Hull Oxfordshire Coventry Warwickshire Essex Kensington & Chelsea Merton NATIONAL AGENCIES When self assessment was introduced in 1996/7 we did a series of joint presentation with the Foster Network (formerly NFCA) to many groups of carers in various parts of the country and maintain links both to them and to the British Adoption and Foster Agency (BAAF).

PRIVATE AGENCIES

Many of our clients are carers who foster on behalf of private agencies including Midland Foster Care Associates (MFCA) South East Foster Care Associates (SEFCA) Wyn Fostering Finders Keepers Orange Grove Terms and Conditions for Foster Carers At the beginning of the tax year we issue an invoice for our services for accounts and taxation for the following 12 months. This invoice will be due for settlement: By the end of that month Or By three consecutive monthly instalments with the first instalment due by the end of that month And in return we will:

• Prepare your accounts to 5 April of that year and forward them to you for review, signing and return to us. 
• Complete your tax return to 5 April of that year and send it to you for review, signing and return to us.
• Tell you how much tax you have to pay and when you have to pay it when we send you your Tax Return.
• File your return and let you know as soon as we receive acknowledgement from the revenue that it has been processed.
• Send you a payslip for submitting with your tax cheque, should you require one.
• Send you a reminder to prepare for the next years Tax Return. For a one off payment we will look after all of this for you for the period to the following 5th April. Our ability to offer this service requires your co-operation. We need you to:
  • Provide us with all the information we ask you for.
  • Make sure that we receive it by the deadlines we specify. Terms and Conditions (cont`d) If the Revenue make an enquiry into your tax return that we have completed, so long as you have paid us and also sent us your papers on time, We guarantee that we will not charge you any further fees. However if the Revenue commence an Investigation then this will involve an additional fee but we will attempt to keep this to a minimum and advise you as costs are incurred. Plus:
  • You can telephone, write, e-mail or fax us at any stage about your accounts or Tax Return and there are no extra charges.
• We will deal with the checking of notices of coding, statements of account and tax demands and charge you nothing extra.
• We will meet at our office, telephone and correspond with you and with the revenue at no extra charge.
• We will arrange periodic visits to your area, where you can meet and discuss matters if this is more convenient. ( An individual visit can be arranged but there will be an additional cost based on our standard terms) This is an all inclusive fee. We cannot include all your tax and financial affairs in this fee. We will make additional charges if you instruct us to carry out additional work, e.g. capital gains tax work, inheritance tax work etc. and we will agree these extra charges with you before starting the job. For the basic work there is no fee clock ticking where every phone call and letter is charged for. Once a fee has been agreed and you have paid it then we will not invoice you again during the tax year. You will know what our charges are in advance of work commencing and can decide whether the fee is acceptable or not. If not you can contact us to discuss the matter and we can part company on good terms, with all work to date paid for and no closing invoice to worry about.