Benefi ts and tax credits changes during 2013 and how they affect foster carers For further information and advice please contact: Fosterline The foster carers adviceline 9 5 pm t 0800 040 7675 e fosterline@fostering.net Fosterline Scotland 10 4 pm Tuesday to Friday t 0141 204 1400 e fosterlinescotland@fostering.net www.fostering.net Fosterline Wales (bilingual) 9.30 12.30 pm t 0800 316 7664 e fosterlinewales@fostering.net Northern Ireland 10 2.30 pm t 028 9070 5056 e doris.dickison@fostering.net January 2013
SPECIAL SUPPLEMENT and tax credits THIS YEAR sees major changes in the benefit and tax credit system. These include Universal Credit, taxing of child benefit for higher earners and the introduction of what has been nicknamed the bedroom tax. This special supplement spells out the key changes and the impact on fostering families. Changes to benefits and tax credits will affect foster carers in a number of ways. According to the Department for Work and Pensions (DWP): The benefit system should offer appropriate support to foster carers to allow them to fulfil a particular, socially valuable role. This role is different both to that of claimants who are parents and to those who are engaged in the labour market and, consequently, it is right that foster carers are treated differently to these groups. benefit entitlement and some foster carers are, therefore, entitled to Income Support, Employment and Support Allowance or Jobseeker s Allowance each governed by a separate set of rules. To add to the confusion, some foster carers can fit into both of the above groups. In both sets of circumstances, whether claiming tax credit or Income Support, the fostered child is not treated as part of the family and the income from fostering is completely ignored. The benefit system should offer appropriate support to foster carers Department for Work and Pensions between placements. Engagement with Government also ensured that the benefits entitlement of foster carers will not change between placements for up to eight weeks. This is new and represents a big step forward. Thanks to our intervention, fostering income will continue to be disregarded when benefits are calculated and the principal foster carer will not have to seek work while a child under 16 is with him or her. If the fostered child has exceptional needs a second foster carer may also be exempted from seeking PHOTO: LAURENCE POLLOCK INSIDE Keep up to date with developments on benefits by visiting www.fostering.net work, or the carer(s) may be exempted until the young person reaches 18. The changes apply to England, Scotland, and Wales. The Northern Ireland Assembly was considering the introduction of the changes as Foster Care was going to press. The current treatment of foster carers in the tax and benefit system is complex. Her Majesty s Revenue and Customs (HMRC) treats foster carers as self-employed for tax purposes. That means that some fosters carers can claim working tax credits. Income from fostering, up to 10,000 per residence plus 200 a week for each child under 11 and 250 a week for each child aged 11 or over, is ignored when working tax credits are calculated. But the DWP disregards payments foster carers receive for fostering when calculating The Fostering Network lobbied ministers and Parliament on behalf of foster carers affected by the change. It was concerned about proposed Housing Benefit cuts where foster carers social housing was thought too large for their needs, regardless of their fostering. This went ahead but as a result of intense lobbying the Government added 5 million annually to the Discretionary Housing Fund in England, Wales and Scotland, to compensate foster carers affected by any loss of housing benefit whether during or For more information ring Fosterline UK-wide telephone contacts in Foster Care magazine, page 2
Universal Credit HOW IT WILL WORK UNIVERSAL CREDIT starts in October. By 2017, it will have replaced tax credits, income support, other means-tested benefits and Housing Benefit. Universal Credit will be paid to people who are not working, such as lone parents, carers, those who are sick and the unemployed but also to people who are in lower-paid work, full in a couple or a single carer will be in that position too. In exceptional circumstances, where there is evidence that a fostered child aged 16 to 17 needs full-time care, a single or nominated foster carer will remain subject only to workfocused interviews, until the child leaves care at 18 or the placement ends. At present, some single foster carers have a real problem when they are between placements Pension Credit THE INTRODUCTION of Universal Credit will have a knock-on effect on pension credit, the meanstested top-up for people over working age. Pension Credit will be amended in future so that it includes a rent element and a children s element. This is because housing benefit and child tax credit will eventually be phased out. Like Universal Credit, no provision will be made for fostered children when working out accommodation costs (see opposite) or the costs of having children. The flip side is that, like now, fostering payments do not count as income. However, where a couple are of mixed age one is below pensionable age and one is above it they will be expected to claim Universal Credit in future, not pension credit, unless already getting pension credit. By basing their claim on the age of the younger partner not the older, it may mean the DWP expects that person to look for work so it may be best if that person is also the nominated foster carer within the couple. For more information visit: www.dwp.gov.uk/docs/ucpbn-8-foster-carers.pdf www.hmrc.gov.uk/helpsheets/hs236.pdf or part-time. So foster carers will not need to decide whether to apply for income support or tax credits. It will simply be based on what they earn, apart from their fostering income. That is because fostering payments will continue to be ignored in full in all circumstances. But the DWP is making other changes when Universal Credit starts. While they have a child in placement, a single foster carer will have to attend work-focused interviews at the Job Centre until the foster child in their care reaches the age of 16. These interviews are designed to help prepare people for work but it is not like signing-on as unemployed. A couple who claim Universal Credit will have to nominate a lead foster carer to attend those interviews. The lead foster carer s partner will be subject to all work-related requirements. They will be expected to look for work, depending on that person s individual capability for work. Once the child reaches 16, both foster carers Again, exceptionally, where there is evidence that a fostered child needs fulltime care by two adults, both members of a fostering couple will only be asked to attend work-focused interviews, and not look for work, until the child leaves care. At present, some single foster carers have a real problem when they are between placements. Unless they have some other qualifications for staying on income support, such as being a lone parent with a child aged under five, they have to stop their income support claim and switch to Job Seekers Allowance and look for work. When Universal Credit starts, this rule will be eased. They will be allowed eight weeks before they have to look for work. 2 Foster Care supplement
The BEDROOM tax THE BENEFIT system does not include fostered children when calculating entitlement to Housing Benefit. Some foster carers will lose out as a result. Foster carers are required to have a bedroom for any fostered children and it is rarely acceptable for fostered children to share. Imagine telling your fostering service that you intend to put the children on a camp bed or make them share with others. So what s changing? From April, Housing Benefit rules for working-age people in council or housing association properties are being amended. If you get housing benefit, you will have to meet 14 per cent of your rent yourself if you have one under-occupied bedroom in your property and 25 per cent if you have two or more. Fostered children do not count when the Housing Benefit officers decide how many bedrooms you need. A similar rule is already in place for people who rent privately. The rule will continue after the changeover to Universal Credit. The new rule encourages those of working-age who do not need extra space to downsize but that hardly applies to foster carers. The Government has recognised this, and pledged an extra 5m nationally for Fostered children do not count when the Housing Benefit officers decide how many bedrooms you need the discretionary housing payment budget, to help councils maintain full housing costs for foster carers. But it will be up to foster carers to make themselves known to local Housing Benefit teams and ask for this funding it will not be paid automatically. Three bedroom HEADACHE Christine is a lone parent with a son of 17 who is still at school. She also fosters a boy aged 14. She gets income support as well as the fostering allowance. Her rent of 120 a week for a three-bedroom house is met in full by housing benefit. From April, she will have to pay the first 14 per cent or 16.80 of the rent herself as she technically only needs a two-bed property. If her son moves out, it gets worse, because she then has to find 25 per cent or 30 a week of the rent herself. Council tax support NATIONALLY AND for all people of a working age getting council tax benefit, the rules are changing from April. From then, local councils will devise their own localised council tax support scheme. They have to make sure that pensioners are no worse off than under the present scheme, but they also have to grapple with a budget that has been reduced by 10 per cent. That means, in most areas, the maximum help with council tax is being cut to 90, 80 or even 70 per cent of the full amount. Some councils will still give 100 per cent help to groups other than pensioners but that is a local decision and has to be paid for from within the reduced budget. For example Christine gets 26 a week council tax benefit to meet her full council tax bill at present. From April, her council has decided that the maximum rebate will be 80 per cent. She now has to find 5.20 a week towards her council tax, on top of any bedroom tax shortfall. This change, and the bedroom tax, will affect working-age foster carers who get working tax credit and/or housing and council tax benefit as well as those on benefits such as income support and job seeker s allowance. Foster Care supplement 3
Child BENEFIT CHILD BENEFIT remains payable for your own children but not for fostered children. The major change for child benefit is that it becomes taxable for households where one partner earns above 50,000 a year and the value will be lost entirely, if they earn above 60,000. Earnings from fostering will be calculated in the same way as they are now for foster care qualifying relief with only the profit, if any, counting. So it is unlikely that one foster carer will earn more than the thresholds above. Because it is based on just one person s earnings in a couple, not joint income, even having a partner earning almost 50,000 will not trigger the tax liability if the other partner has a small profit from fostering. Disability Living ALLOWANCE IN JUNE, and slightly earlier in some areas, no new DLA claims will be accepted, except for children up to 15. Those who need help with daily living and mobility will be told to claim personal independence payments (PIP) which will be harder to claim, potentially excluding some DLA claimants. ExistingDLA claimants, including those on SOME FOSTER carers claim carers allowance because they are looking after a child or young person who gets DLA at the middle or higher rate for care needs. indefinite or lifetime awards, will be invited to apply for PIP from October, and the changeover will take three years. Young people up to 15 will stay on DLA but they will be reassessed for PIP when they turn 16. So some fostered children with special needs will be among the first to transfer to the new benefit. Visit www.dwp.gov.uk/pip Carers ALLOWANCE In future, the person they care for will have to be getting standard or enhanced rate PIP for the foster carer to continue claiming carers allowance The benefit cap THE BENEFIT-CAP is a key element of the Government s reform proposals. After September, no working-age couple or family should get more than 500 a week in benefits and no individual should get more than 350. There are exceptions to this rule families or individuals who get DLA or working tax credit, for example, are excluded. Foster carers will generally be unaffected, because the cap allows for benefits like child benefit and child tax credit, which foster carers do not get for the children they foster. Fostering allowances are not included as income. But anyone caring for children who are not officially looked-after may be affected for instance, family and friends carers, or special guardians. Where the children are no longer in care, they should attract child benefit and child tax credit and this, combined with extra housing benefit might be enough to trigger the cap. 4 www.fostering.net Foster Care supplement: Compiled Gary Vaux, edited Laurence Pollock, designed RF Design