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3.11.7 Payments and Benefits Issues for Staying Put Carers

SCOPE OF THIS CHAPTER

This chapter focuses on the issues around financial entitlements and responsibilities that may be available to Staying Put carers. It is a complex area that depends upon their circumstances and situation and that can also impact upon them financially in terms of any allowances and benefits that are received or are an entitlement.

RELEVANT GUIDANCE

HM Government, ‘Staying Put’: Arrangements for Care Leavers Aged 18 and Above to Stay on with their Former Foster Carers, (May 2013)

RELEVANT CHAPTER

Staying Put: Financial Requirements and Personal Benefits for Young People Procedure

Southwark Staying Put Policy

This chapter was placed in the Manual in September 2015.


Contents

  1. Payments to Southwark Staying Put Carers
  2. Staying Put Arrangements for Independent Fostering Agency (IFA) Carers
  3. Guidance for Supervising Social Workers and Personal Advisors
  4. Considerations for Staying Put Carers Relating to Impact of Benefits and Tax Arrangements
  5. Council Tax, Council Tax Support and Non-Dependent Deductions
  6. The Treatment of Benefits
  7. Income Tax and National Insurance Issues for Staying Put Arrangements
  8. Universal Credit
  9. Income: Means-Tested Benefits


1. Payments to Southwark Staying Put Carers

This section covers the rules regarding payments to Staying Put carer/s that are in receipt of a means tested benefit/s. National Insurance benefits are not affected by this income.

Southwark Staying Put Carers will receive an allowance of £250 per week.

The allowance is adjusted according to the income of the young person, benefits claimed, employment. 

The foster carer and young person make arrangements between themselves to reimburse monies.

This will be documented in the license agreement and living together agreement.


2. Staying Put Arrangements for Independent Fostering Agency (IFA) Carers

The commissioning service will negotiate staying put allowances for IFA carers with their agencies through the framework agreement and on an individual basis where there is a spot-purchase arrangement. Reference will be made to the arrangements for allowance payments and reclaiming of Housing Benefit for Southwark Staying Put carers.


3. Guidance for Supervising Social Workers and Personal Advisors

The Supervising social worker in conjunction with the Personal Advisor will be responsible for assisting the young person to make a Housing Benefit claim where ever possible. The processing of Housing Benefit will require the Department of Work and Pensions (DWP) to be clear that the Housing Benefit will need to be paid to Southwark direct. We have a bank account specifically for Housing Benefit to be paid into. Finance are able to give details of this account to put on any application.

When the housing benefit payment is paid direct to the IFA carer or provider, Southwark’s invoice will reflect the deduction and payment will be made for the balance.


4. Considerations for Staying Put Carers Relating to Impact of Benefits and Tax Arrangements

4.1 Payments made to the Staying Put carers from the Local Authority Children’s Services under section 23C of the Children Act 1989 via the young person, or directly to the carer/s on behalf of the young person are disregarded when calculating the carer’s entitlement to means tested welfare benefits. The section 23C payment is disregarded in its entirety in circumstances where young people continue to live as a member of their former foster carer’s family on a non-commercial basis. Where young people contribute to the arrangement and/or claim housing benefit (which requires a commercial arrangement) they cannot continue to be deemed to be living solely in a familial arrangement and therefore any element of the payment from a source other than the section 23C element is taken into account when calculating the impact on the “Staying Put” carers own welfare benefit claim. The section 23C element will always be disregarded when calculating the Staying Put carer’s welfare benefit entitlement.
4.2 Where Housing Benefit is paid to the young person, or they pay the rent element from their earnings, all non-section 23C payments regardless of their source will be counted as income under the ’Boarder’ rules. Under these rules the first £20.00 and 50% of the remainder is disregarded. For example, if a carer receives £184.73 per week in total for the Staying Put arrangement of which £120.73 is paid by the local authority under section 23C and £64.00 is paid by the young person from housing benefit, the amount taken into account by the DWP will be £64.00. Of the £64.00, £20.00 and a further £22.00 (50% of the £44.00) is disregarded, therefore the carer will be deemed to have a £22.00 per week income from the ‘Boarder’ (Staying Put) arrangement and they will lose £22.00 of their Income Support, income based Jobseekers Allowance or income-related Employment and Support Allowance.
4.3 In circumstances where the Staying Put carer is in receipt of Housing Benefit along with the above-mentioned benefits, the Housing Benefit is not affected. If the Staying Put carer is getting Housing Benefit but NOT getting another means-tested benefit, the £22.00 will count as income, and this will lead to a £15.00 per week reduction in Housing Benefit (a 65p per week reduction for every £1.00 of extra income).
4.4 This arrangement would apply to each young person if two or more young people aged eighteen or over remain in the placement. In these situations where the Staying Put carer is in receipt of a means tested benefit the young person should still claim Housing Benefit, an amount equivalent to the carers DWP Benefit reduction will be paid to them from section 23C. The section 23C compensatory payment will be disregarded in full by the DWP. In the above example a £22.00 or £15.00 per week compensatory section 23C payment will be made.
4.5 Where the Staying Put carer is over the pension credit age (the pension credit entitlement age is rising from 60 to 65 between 2010-2020) and is in receipt of Pension Credit more generous disregard rules regarding income from ‘Boarder Arrangements’ apply and should be explored. In practice, the whole amount paid (in respect of a ‘Boarder Arrangement’ to the carer in receipt of Pension Credit is likely to be disregarded, regardless of the young person claiming Housing Benefit and the source of the payment to the carer.
4.6 In situations where a Staying Put carer is getting Child Tax Credit or Working Tax Credit, they should declare their ‘profit’ from providing a Staying Put arrangement, as calculated on page 21. That profit may well be nil.
4.7 Early planning for, and identification of, the benefits and financial circumstances of individual carers is critical to ensuring that appropriate plans and arrangements are in place for both the carers and young person. Given the complexity of making these arrangements, commencing planning these from the child’s 16th birthday should provide sufficient time to ensure the necessary arrangements and support are in place by their 18th birthday.


5. Council Tax, Council Tax Support and Non-Dependent Deductions

5.1 From April 2013 Council Tax Benefit has been replaced by Council Tax Support schemes that reflect individual local authority priorities and are administered through local rules.
5.2 The impact of the Staying Put arrangement on Staying Put carers Council Tax and Council Tax Support will depend on both the circumstances of the Staying Put carer and the young person. For example, full time students are ‘invisible’ for Council Tax purposes and will not have any impact on the Staying Put carers Council Tax or Council Tax Support.
5.3 In circumstances where a Staying Put carer is working and in receipt of the 25% single person Council Tax reduction, this discount may continue when a Staying Put young person is living in the arrangement. The continuation of the 25% discount will depend on the circumstances of the young person.
5.4 Where Staying Put young people are claiming a means tested benefit, a Non-dependent Deduction should not be applied to the Staying Put carers own means tested benefit claim.
5.5 When planning for a Staying Put arrangement, consideration should be given to the impact of the arrangement on the Staying Put carers Council Tax, Council Tax Support and whether a Non-dependent Deduction will be applied. In circumstances where an increase in Council Tax occurs; a reduction in Council Tax Support applies, or a Non-dependent Deduction is applied an application should be made to the Service Delivery Manager Fostering for a payment from section 23C equivalent to the carers financial loss.
5.6  Staying Put young people will not incur an ‘Under Occupancy’ or ‘bedroom tax’ charge on the Staying Put carers.


6. The Treatment of Benefits

Payments from Children’s Services to young people under Section 17, Section 20, section 23, section 24 and section 31 (Children Act 1989) do not count as income for benefit purposes. Payments made to young people and passed to former foster carer/s from section 23C (Children Act 1989) are disregarded in the assessment of the former foster carer/s’ income for benefit purposes, if the young person was formerly in the claimant’s care, is aged 18 yrs or over and continues to live with the claimant within a non-commercial family type arrangement. If the arrangement is a commercial one, (i.e. if the young person contributes to the arrangement by paying rent), the section 23C disregard ceases on any non-section 23C element of the payment.


7. Income Tax and National Insurance Issues for Staying Put Arrangements

7.1 Where young people remain living with their former foster carer/s under a Staying Put arrangement, the Income Tax and National Insurance rules that apply are set out in the ‘Shared Lives Carers’ – ‘Qualifying Care Relief’ Guidance.
7.2 The ‘Shared Lives Carers’ – Qualifying Care Relief Guidance’ sets out that Staying Put carers receive tax exemptions up to a given ‘qualifying amount’ for each Staying Put young person living with them. The Staying Put qualifying rate mirrors the system and amounts that applied when the placement was previously a foster care placement.
7.3 Staying Put carers will be covered by the Qualifying Care Relief system where they provide a Staying Put arrangement for a young person who was looked after immediately prior to the young person’s 18th birthday. Qualifying Care Relief can continue until the young person reaches the age of 21, or, until they complete a programme of education or training being undertaken on their 21st birthday.
7.4 The tax free allowance only applies to the Staying Put carer’s income from caring. If they have income from other sources, they will pay tax on that income in the normal manner.
7.5

If the Staying Put carer/s exceed the allowance they will have a choice of using the ‘simplified’ method or the standard profit and loss method to calculate their taxable profits. The carer/s will also be liable to pay Class 4 National Insurance Contributions on their taxable profit. Under the simplified method, a carer’s taxable profit is the income they receive from caring which exceeds their tax free allowance. Where foster carer/s or Staying Put carer/s do incur an Income Tax and Class 4 National Insurance liability and they have not used their personal allowance this can be used to off-set this liability.

Individual carers can consult their local HMRC office for guidance on their circumstances and liabilities.
7.6 In practice HMRC will treat the taxable profit from foster care or Staying Put care as earnings from self-employment for National Insurance Contributions purposes.
7.7 Staying Put carer/s as well as foster carer/s should note that they may be able to claim Working Tax Credits which are administered by HMRC. Fostering/Staying Put care is counted as work for Working Tax Credit purposes. The Qualifying Care Relief system provides for foster carer/s and/or Staying Put carer/s to earn up to a given amount without paying Income Tax or Class 4 National Insurance Contributions on their caring income. The Income Tax free allowance consists of two elements. Firstly, a fixed amount per foster care or Staying Put household per year (for 2014 -2015 this is set at £10,000).
7.8 Secondly, an additional amount per week per child (£200 per week under the age of eleven (0-10), £250 per week age eleven to their eighteenth birthday (11-17) 2014-2015) and £250 per week per adult aged eighteen to the twenty-first birthday (18-20) or until the end of the programme of education or training, as defined as Staying Put by HMRC (see terminology section).
7.9 The £10,000 per year applies once per household regardless of how many foster children or Staying Put young people are placed. The additional amount applies per child/young person per week. Where there is more than one paid Staying Put carer in the household, the allowance is shared equally by both carers.
7.10 The tax free allowance is only available to households with three or fewer placements. However, foster care placements are excluded for this purpose, and sibling groups are counted as one placement. The carer’s taxable income is included in the total household income that is used to assess the amount of tax credits that they are entitled to. So, where the carer is paid less than their tax free allowance, their income from caring for tax credits purposes is also nil.
7.11

HMRC is aware that a number of foster carers and Staying Put carers may not have registered for Class 2 National Insurance Contributions because they make little or no taxable profit. Foster care and Staying Put care is deemed as self-employment and as such carer/s should register as self-employed. All self-employed people aged 16 and over who are below State Pension age are liable and must register to pay Class 2 National Insurance Contributions. Failure to do this may affect their entitlement to Employment and Support Allowance, Maternity Benefit, State Pension and Bereavement Benefit. However, self-employed carers may be able to apply for Carers Credits which have replaced Home Responsibilities Protection, and those with low taxable profits may be able to apply for a Small Earnings Exemption.

  • To claim a carer’s credit, foster carers/Staying Put carers must complete form CF411A available from HMRC;
  • If carers have not previously registered as self- employed they can obtain further information by calling the Newly Self-employed Helpline on 0300 200 3504;
  • If they are currently registered to pay Class 2 National Insurance Contributions they can obtain further information by calling the Self-employed Helpline on 0845 915 4655 instead;
  • HMRC Help sheet 236 sets out information about the ‘Shared Lives Carers’ – ‘Qualifying Care Relief Guidance’ - Fostering and Staying Put Income Tax and National Insurance framework.
Foster carers and Staying Put carers should always inform the DWP and HMRC if their circumstances change and should always check with the DWP and HMRC regarding their personal circumstances and how payments for foster care or Staying Put care may affect their means tested benefits or any Income Tax or National Insurance liability.


8. Universal Credit

8.1 The information in this guidance sheet is correct as of April 2015 and will apply to Staying Put arrangements during 2015-2016. The introduction of the Universal Credit system will create changes to the benefit and tax credit system for foster carers, Staying Put carers and young people in, and leaving care.
8.2 The introduction of Universal Credit is being tested through a number of Pathfinder areas and will, in time, be phased on a national basis.
8.3

During the phased transfer period there will be four possible Staying Put arrangements, all of which will have different impacts on the Staying Put carer and young person’s claim:

  1. Staying Put carer on old benefit system, young person on old benefit system;
  2. Staying Put carer on old benefit system, young person on Universal Credit system;
  3. Staying Put carer on Universal Credit system, young person on old benefit system;
  4. Staying Put carer on Universal Credit system, young person on Universal Credit system.
8.4 Foster carers and Staying Put carers must ensure that they inform the Department for Work and Pensions and HM Customs and Revenue of any change of circumstance in their family, with their foster children, or with their Staying Put young people.


9. Income: Means-Tested Benefits

Payments by Social Services

The following payments are ignored:

  • A payment from a Social Services Department under s17, 23B, 23C or 24A of the Children Act 1989 or, in Scotland, a payment from a social work department under s12 of the Social Work (Scotland) Act 1968 or under ss29 or 30 Children (Scotland) Act 1995 – i.e. payments from social services to assist children in need or young people who have been in care or who have been looked after. For IS and income-based JSA, such payments are not ignored if you or your partner are involved in or, for IS only, have returned to work after a trade dispute;
  • Income Support Sch 9 para 28 IS Regs;
  • Job Seekers Allowance Sch 7 para 29 JSA Regs;
  • Employment Support Allowance Sch 8 para 30 ESA Regs;
  • Housing Benefit Sch 5 para 28 HB Regs;
  • Council Tax Benefit Sch 4 para 29 CTB Regs 36.

Note: Financial arrangements for staying put will be reviewed annually.

End