Do Foster Carers Pay Tax? Qualifying Care Relief Explained

Most foster carers in England pay no income tax at all on their fostering payments. That is not a loophole. It is a relief written into tax law for people who do this work, and it is generous.

Here is how it works in the 2026/27 tax year, and the handful of things you actually have to do.

Please note: this is general information, not personal tax advice. The figures below apply to the 2026/27 UK tax year, which began on 6 April 2026. Check your own position against HMRC’s helpsheet HS236 on qualifying care relief, the Low Incomes Tax Reform Group, or an accountant.

Do Foster Carers Pay Tax?

Usually, no.

You are self-employed for tax purposes and you do have to send HMRC a return each year. Almost all carers reach the bottom of that return and find they owe nothing.

The reason is Qualifying Care Relief.

Am I Really Self-Employed?

Yes, in HMRC’s eyes.

You register once, and only once. If you already file a return because you are self-employed at something else, or you are fostering alongside a job, you keep the registration you have and simply tell HMRC you are now fostering as well.

The deadline is 5 October following the end of the tax year you started in. Approved in October 2026? Register by 5 October 2027.

What Is Qualifying Care Relief?

It is a tax-free threshold that replaces the usual business way of working out profit. You do not sit adding up receipts for school shoes and petrol. You compare what you were paid against a threshold built from two parts.

For the 2026/27 tax year:

• a fixed amount of £20,440 per fostering household
• plus £435 for every week you care for a child aged under 11
• plus £515 for every week you care for a young person aged 11 or over

Add those together and you have your qualifying amount. If your fostering income for the year comes to less than that figure, there is no taxable profit and nothing to pay.

A week runs Monday to Sunday, and a part week counts as a whole one. A child who arrives on a Friday evening earns you the full week.

Your personal allowance sits on top of all this. That is £12,570, and the freeze on it now runs to April 2031.

What Does That Look Like With Real Money?

Fostering Hearts pays £479.50 a week for a child aged 0 to 10, and £507.50 a week for a young person aged 11 and over.

Say you care for a nine-year-old for 40 weeks of the tax year.

• what you were paid: 40 x £479.50 = £19,180
• your qualifying amount: £20,440 + (40 x £435) = £37,840

You are £18,660 under the line. No tax.

Now take a busier household. Two young people aged 12 and 15, both with you for the whole year.

• what you were paid: 2 x £507.50 x 52 = £52,780
• your qualifying amount: £20,440 + (2 x 52 x £515) = £74,000

Still no tax, with room to spare. That room matters, because a higher-needs placement attracts an extra £100 to £200 a week on top of the weekly rate. There is more detail on the rates themselves in our guide to foster carer allowance and pay.

What If Two Of Us Are Approved?

The fixed amount is per household, not per person. Where two carers in the same household are both approved, it is divided equally between them.

If you were only fostering for part of the tax year, the fixed amount is reduced in proportion to the days you were a carer. Approved in January, so caring for roughly a quarter of the year? Expect roughly a quarter of the fixed amount. Worth knowing if you are partway through the assessment process now and wondering about your first return.

What About National Insurance And My Pension?

This is the part carers get caught by, so read it twice.

Class 4 National Insurance only starts on profits above £12,570, charged at 6 per cent up to £50,270 and 2 per cent above that. Most carers never reach it.

But that is the catch. No taxable profit means no automatic National Insurance year, and a missing year is a smaller state pension later.

Two ways to protect your record:

• pay voluntary Class 2 contributions, £3.65 a week in 2026/27
• apply for National Insurance credits as an approved foster carer, using HMRC form CF411A

Both are worth an evening of your time. Neither happens automatically, so nobody will chase you about it.

Do I Still Have To File A Return If I Owe Nothing?

Yes. HMRC expects the return whether or not there is tax at the end of it.

The dates for the 2025/26 tax year:

• paper return: 31 October 2026
• online return: 31 January 2027

Miss the online date and there is a £100 penalty, even on a nil return.

Do I Need To Keep Digital Records Now?

Not yet.

Making Tax Digital for Income Tax began in April 2026, and plenty of self-employed people are now sending HMRC quarterly updates instead of one return. Carers sit outside it. GOV.UK is explicit: if you claimed qualifying care relief on your 2024/25 tax return, you do not need to use Making Tax Digital for Income Tax for 2026/27.

Keep half an eye on it for later years. For now, the annual return is all.

What If My Fostering Income Goes Over The Qualifying Amount?

Then you have a decision to make, and it deserves a conversation with someone who can see your figures.

You can use the simplified method, where your taxable profit is your fostering income minus your qualifying amount and nothing else. Or you can work it out the ordinary business way, taking your real fostering expenses off your fostering income.

Most carers are better off with the simplified method. Carers with unusually heavy costs sometimes are not. Ask your accountant, or ask us and we will point you towards someone who knows fostering.

You Will Not Be Doing This On Your Own

We send you a statement of your fostering income at the end of each tax year, so the figure you need for your return is already worked out for you.

Your supervising social worker supports around six families, not twenty, which means there is time to sit at your kitchen table in January and go through the paperwork with you.

The council tax contribution we pay as part of the reward package sits separately from all of the above, and it rises the longer you foster.

We cannot fill in your return for you. But you will never be handed a form and left to guess at it.

Frequently asked questions

Do foster carers pay tax on their fostering payments?

Most do not. Qualifying Care Relief gives every fostering household a tax-free threshold that is usually well above what a carer is paid, so there is no taxable profit and no tax due.

Is Qualifying Care Relief per child or per household?

Both. The fixed amount of £20,440 for 2026/27 is per household. The weekly amounts, £435 for a child under 11 and £515 for a young person aged 11 or over, are earned for each child in your care.

Do I still need to file a tax return if I owe no tax?

Yes. Approved foster carers are treated as self-employed, so you register with HMRC and file a return each year, even when the answer is nil. For the 2025/26 tax year the online deadline is 31 January 2027.

Will fostering count towards my state pension?

Not automatically, because most carers have no taxable profit. You can pay voluntary Class 2 National Insurance contributions of £3.65 a week in 2026/27, or apply for National Insurance credits as an approved carer using HMRC form CF411A.

Do I need an accountant to foster?

Not usually. Most carers complete their own return using the simplified method. If your fostering income is high, or your costs are unusual, an accountant who understands fostering is worth the fee.