Care relief
Qualifying care relief
Carers typically receive income from various sources for looking after children and adults who are placed under their care – this income needs to be declared to HMRC via a self-assessment tax return.
However, carers can claim what is known as qualifying care relief whereby the payments they receive for the children placed in their care are not taxable, up to a certain amount.
How much can I claim?
The maximum available qualifying carers allowance is made up of two parts:
- The Fixed amount
- You can claim up to a maximum of £10,000 in each respective tax year for each household
- This amount is divided by the number of carers in the same household
- This amount is pro-rated depending on how many days you were deemed to be an approved carer in each tax year
- The weekly amount
- You can also claim a weekly amount for each child/adult under your care dependant on their age which is as follows:
- £200 per week for children under 11
- £250 per week for children over 11
- £250 per week for each adult
Record keeping
In order to claim the qualifying carers allowance, you will need to ensure that you keep adequate records such as any payments received from
- your local authority
- your fostering service provider
- your shared lives provider
What if your qualifying amount exceeds your payments received?
HMRC will treat you as neither making a profit nor loss for the tax year which will mean that you will not be required to make any class 4 national insurance contributions (NICs) on your caring income.
However, if you have any other income, you will have to pay the tax and NIC in the normal way.
What if your payments received exceed your qualifying amount?
Put simply, if after accounting for the qualifying carers allowance you still have some income left over, this difference will be subject to tax and NIC and will need to be declared and paid via a self-assessment tax return.
For example
- 10-year-old and 15-year-old in my care for the entire tax year ending 5th April 2021
- I am the single carer in my household.
Qualifying carers amount
- Fixed amount of £10,000
- Weekly amounts of:
10 year old > £200 per week for 52 weeks = £10,400
15 year old > £250 per week for 52 weeks = £13,000
Total qualifying carers amount is therefore £33,400
Scenario 1 > Receive £550 & £650 for the 10- & 15-year-old respectively
| 10-year-old | 15-year-old | |
| Per week | 550.00 | 650.00 |
| Per year | 28,600.00 | 33,800.00 |
| Total Income | 62,400.00 | |
| Less: qualifying carers all. | – 33,400.00 | |
| Assessable amount | 29,000.00 |
Scenario 2 > Receive £275 & £350 for the 10- & 15-year-old respectively
| 10-year-old | 15-year-old | |
| Per week | 275.00 | 350.00 |
| Per year | 14,300.00 | 18,200.00 |
| Total Income | 32,500.00 | |
| Less: qualifying carers all. | – 33,400.00 | |
| Assessable amount | – £NIL |
You may also like…
Marriage allowance
What are Self-Assessment tax returns?
60% Pensions relief
Dependent relative relief
Office parties
Mental health & Wellbeing in the workplace
Beware of little expenses; a small leak will sink a great ship.
Benjamin Franklin
