Treasury to fix tax anomalies for carers

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.