If you foster as part of a couple, there are a few options available when deciding how to register your self-employment:
- One partner (often the main carer) registers as self-employed and accounts for all the fostering payments. This allows the partner to use any of their unused personal allowance.
- Both partners register as self-employed as sole traders, and they split the Qualifying Care Relief (QCR) tax threshold and any profit 50/50. This is commonly used where both partners are fostering fulltime, they have a profit from their fostering and they both have available their personal tax allowance (in addition to the QCR tax allowance).
- Both partners enter into a ‘partnership’ where each tax year they have the flexibility to split any taxable profit however they like, e.g. 60/40, 70/30, 20/80. This can be helpful where a partner might have some other employment and their earnings might change from year to year.
Note: The Qualifying Care Relief has increased significantly, therefore more foster carers will be below their threshold and have no tax to pay. The need/advantage to enter a partnership is only in very exceptional cases. HMRC will accept any of the above arrangements. Think about what makes best financial sense in your situation.
