Lodgings payments tax floor to change

The Inland Revenue is expected to confirm next month that it is to
change the tax threshold on supported lodgings payments for
over-18s.

The move would improve the financial support available to young
people encouraging them to continue living with their foster carer
beyond their 18th birthday.

The Revenue is in talks with the Fostering Network charity over the
change which would bring the threshold into line with the one for
under-18s.

Supported lodgings payments for over-18s are tax-free up to
£4,250 but then taxed as earnings. Payments can be as little
as £50 a week for each young person the carer provides
accommodation for.

Some family social workers fear the rules act as a disincentive to
carers to continue providing homes for over-18s and could force
some into homelessness.

“It is financially unmanageable, too confusing to work out and too
daunting to approach,” one social worker said.

Supported lodgings payments are given to foster carers who provide
accommodation to young people to help them cover their costs. For
under-18s, the tax rules for supported lodgings payments are the
same as fostering allowances with the first £10,000 tax free.

An agreement on a similar system for payments for the over-18s is
expected to be finalised by the end of June and applied
retrospectively to the beginning of this financial year.