HMRC rules for foster carers
In the UK, foster carers are classed as self-employed for tax purposes. However, you do not pay tax like a typical business. Instead, you benefit from a highly supportive system designed to ensure fostering remains financially viable.
Qualifying Care Relief (QCR)
Under QCR, your tax-free allowance is calculated as follows:
- Fixed allowance — £10,000 per year per household.
- Weekly child allowance (under 11) — £200 per week, per child.
- Weekly child allowance (11+) — £250 per week, per child.
If your total fostering payments are below your calculated QCR limit, you pay absolutely no tax on your fostering income.
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Self-Assessment requirements
Even if you owe no tax, you must register as self-employed and file a Self-Assessment tax return each year. You simply enter your fostering income and claim Qualifying Care Relief to show your tax liability is zero.