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Good question! My understand is all fostering is classed as a self-employment therefore carers need to register as self-employed and for Class 2 National Insurance. There is lots of useful information under finances on the website too, but it might be worth checking with the HMRC!
Normally the main carer would only be required to register as self-employed but if you do foster with your partner it may be beneficial to trade as a partnership but only if their personal allowance is not fully utilised. The numbers would need to be crunched to see if it would be beneficial for you.
We would always recommend individual advice from a specialist as your personal circumstances will differ from other carers.
What advice would you give to a foster carer who has not registered as self employed and not completed tax returns but has been fostering for several years? This situation is not uncommon, possibly due to lack of clear guidance from some LAs/IFAs??
As all foster carers now have to be registered as self employed then there is no choice any more. Contact a financial advisor in the first instance for them to negotiate the best options with regard the tax office. If members of an organisation like Fostertalk or Fostering Network then within your membership there are possibly tax adviors there to help or failing that it may be prudent to get an accountant to help. It would seem harsh for the tax office to go back over the years as a foster carer’s tax status was unclear.
It would probably be best to take independent financial advice as soon as possible from a qualified accountant with knowledge of foster carers finances. Some Foster Carers may have membership with an organisation who can provide this sort of advice or alternatively The Citizens Advice Bureau may be able to provide independent financial advice – contact details can be found on the Useful Links page of this website.