BIM52760 - Care providers: Foster carers: 2002/3 and earlier years

The categorisation and treatment for tax purposes of the various elements in payments made to foster parents, were agreed with the National Foster Care Association, as follows:-

a) BASIC BOARDING OUT ALLOWANCES

These varied according to the age of the child, and the scale rates themselves vary throughout the country. They did not give rise to any profit and need not be shown in returns. The allowance was intended to cover the normal cost of looking after, feeding and clothing each child.

b) REIMBURSEMENTS OF ADDITIONAL COSTS

These were often described as `enhanced allowances'. They were intended to reimburse specific costs incurred in fostering the children, who are in many cases handicapped. Normally no profit will arose, so that such payments need not be shown in returns. This allowance was to cover:

a) the cost of special clothing and dietary or educational requirements.

b) additional wear and tear and increased household costs generally.

c) items as diverse as outlays on presents for the children and the costs of attending case conferences or visiting hospitals.

c) REWARD PAYMENTS

The `reward' element in the total payments received by the foster parents was in return for services, and was normally the amount of profit assessable under Case I or II of Schedule D.