BIM52755 - Care providers: Foster carers: introduction

For the purpose of this guidance a foster carer is a person:

1. with whom a child has been placed under sections 23(2)(a), or 59(1) of the Children Act 1989, or
2. who is approved as a foster carer by a local authority or voluntary organisation in accordance with regulations under section 5 of the Social Work (Scotland Act) 1968 and is providing accommodation for the child who is being ‘looked after’ by a local authority within the meaning of section 17(6) of the Children (Scotland) Act 1995, or
3. with whom the child has been placed under section 5 of the Social Work (Scotland) Act 1968, or
4. with whom the child has been placed pursuant to a supervision requirement under section 70 of the Children (Scotland) Act 1995, or
5. with whom the child has been placed under Article 27(2)(a) or 75(1)(a) of the Children (Northern Ireland) Order 1995.

Excluded persons are:

• the parent of the child.
• a person who is not the parent but has parental responsibility.
• a person in whose favour a residence or contact order has been made immediately before the care order was made or the child was placed in care.

For 2003/04 and later years profits received by an individual from the provision of foster care will be exempt from income tax in a year of assessment if his or her total receipts from foster care do not exceed an individual amount.

Individuals whose total receipts from foster care exceed their individual amount will be able to choose between:

• calculating profits in the normal way on total receipts less actual expenses and capital allowances; or
• treating as their taxable profit the amount by which their total receipts from foster care exceed their individual amount, without any separate relief for expenses or capital allowances.

See BIM52765.

For calculation of the exempt amount see BIM52770.

For information on capital allowances see BIM52775.

For 2002/03 and earlier years special schemes for `professional' foster parents were commonly set up by local authorities. Arrangements varied from one authority to another but generally the schemes involved payments at such a level that a profit arose. General guidance for local authorities and other paying agencies and for foster parents was given in the booklet `Foster Care Allowances and Income Tax' published by the National Foster Care Association. See BIM52760.