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The Treasury has recommended harmonising the tax arrangements of foster carers across the country to help make fostering more attractive.

The proposals, released last week by the paymaster general Dawn Primarolo, would exempt the vast majority of foster carers from paying any income tax.

Currently, income tax arrangements for foster carers are negotiated locally between a council and the local tax office. This can mean some carers are taxed on the expenses they are paid by a local authority for looking after a child, while in other areas the amount paid in expenses may be higher and also untaxed.


Under the Treasury plan, payments to cover the capital costs of providing a foster care service up to £10,000 would be tax free. An additional amount per fostered child of £200 for those aged 11 and under and £250 aged 11 or over to cover weekly living expenses would also be tax free.

A Fostering Network spokesperson said that while it would be good to do away with the current "piecemeal" approach, it was still unsure whether the thresholds took account of regional variations in living costs.