Do Foster Carers Pay Tax on Their Allowance?

Who this guide is for

Foster carers anywhere in the UK who want to know whether they pay Income Tax on the fees and allowances they get for fostering, how qualifying care relief works, and whether they need to register with HMRC and send a Self Assessment tax return. The same HMRC rules and amounts apply in England, Wales, Scotland and Northern Ireland. Qualifying care relief also covers some other carers, such as shared lives, kinship and staying put carers: see "Who can use qualifying care relief?" below.

What this guide does not cover

• How much allowance or fee your fostering service should pay you, and the minimum allowances in each nation. This guide does not cover them: ask your fostering service, or Citizens Advice (Advice NI in Northern Ireland).
• Approval, reviews, allegations, placements being stopped, ending your approval and how to challenge it, and complaints about a fostering service. This guide does not cover them: ask your fostering service, or Citizens Advice (Advice NI in Northern Ireland).
• Whether a foster carer is an employee or worker, and claims about employment rights. This guide does not cover them: ask Citizens Advice (Advice NI in Northern Ireland).
• Benefits and Universal Credit while you foster, and payments for special guardianship, adoption or child arrangements. This guide does not cover them: ask Citizens Advice (Advice NI in Northern Ireland).
• How money from a private arrangement with friends or relatives is taxed, and whether care given only now and then (for example occasional respite care) counts as a business. This guide does not cover them: ask HMRC.
• Capital allowances, losses, partnerships, accounting years that do not end on 5 April, how the weekly amounts work when 2 carers share the care of the same child, and supported lodgings under the Rent a Room Scheme. This guide does not cover them: see HMRC helpsheet HS236 on GOV.UK, or ask HMRC.
• Income Tax rates, penalties, appeals against HMRC and complaints about HMRC. This guide does not cover them: check GOV.UK or ask HMRC.
• Tax on wages from a job or a pension paid through PAYE, and tax codes: use the tax code checker.

The questions that decide the answer

1. Which tax year is your question about? A tax year runs from 6 April to 5 April. The 2025 to 2026 tax year ended on 5 April 2026. The 2026 to 2027 tax year ends on 5 April 2027. The amounts are different for each year.
2. Who placed the child with you: a council (local authority), a health and social care trust in Northern Ireland, or a fostering service provider? Or is it a private arrangement with friends or relatives?
3. How many approved carers are there in your household, and were you an approved carer for the whole tax year?
4. How many children did you care for in the tax year, how old were they, and for how many weeks each?
5. How much did you get for fostering in the tax year in total, counting all fees, reward payments and allowances?
6. Have you registered with HMRC as self-employed, and have you sent a tax return before?

"Do I pay tax on my fostering allowance?"

Usually not. Qualifying care relief lets you receive payments for foster care tax free, up to your qualifying amount. GOV.UK says that this means you do not usually pay tax on your earnings from foster care.

Count all the payments you get for the care from your council, health and social care trust or fostering service provider, including fees, reward payments and allowances. Keep a record of them.

If the total you receive for fostering in the tax year is not more than your qualifying amount, HMRC treats you as making no profit and no loss for the year. You pay no Income Tax and no Class 4 National Insurance on your fostering income.

If you have other income, for example from a job or savings, it is taxed in the normal way.

If you use qualifying care relief, you cannot also claim your actual expenses or capital allowances.

"How much can I get tax free?"

Your qualifying amount has 2 parts: your share of a fixed amount for each household, plus a weekly amount for each child you care for.

• 2026 to 2027 tax year (6 April 2026 to 5 April 2027): fixed amount £20,440 for each household for a full year. Weekly amount £435 for a child under 11 and £515 for a child aged 11 or over.
• 2025 to 2026 tax year (6 April 2025 to 5 April 2026): fixed amount £19,690 for each household for a full year. Weekly amount £415 for a child under 11 and £495 for a child aged 11 or over.

The weekly amount for each adult you care for is £515 in the 2026 to 2027 tax year and £495 in the 2025 to 2026 tax year.

The amounts go up each April in line with inflation. Always use the amounts for the tax year you are working out.

Example from GOV.UK: Laura fosters a 14-year-old for the whole year and an 8-year-old for 10 weeks. Her household gets the £20,440 exemption. For the 14-year-old she gets £515 for 52 weeks, which is £26,780. For the 8-year-old she gets £435 for 10 weeks, which is £4,350. Altogether, Laura does not pay tax on the first £51,570 she earns from fostering.

"How do I count the weeks and share the fixed amount?"

• Each week starts on a Monday and ends on a Sunday. A part week counts as a full week, so a child placed with you from a Wednesday to the next Tuesday counts as 2 weeks.
• The under-11 weekly amount is only for a week in which the child is under 11 for the whole week. The week of the child's 11th birthday, and every week after it, uses the weekly amount for a child aged 11 or over.
• If there is more than one carer in the same household, you share the fixed amount equally: divide it by the number of carers in the household.
• If you were an approved carer for only part of the tax year, you get only part of the fixed amount. Count the days you were an approved carer, multiply them by the fixed amount, and divide by 365 (or 366 if that year has a 29 February). If there is more than one carer in the household, divide that by the number of carers too.

"What if I am paid more than my qualifying amount?"

If the fees, reward payments and allowances you get are more than your qualifying amount, you can choose one of 2 ways to work out your tax:

• The simplified method: you pay tax on the difference between the payments you got for qualifying care and your qualifying amount.
• The profit method: you pay tax on your total payments for care minus your expenses and capital allowances. You must keep detailed records of your income and outgoings, and fill in the self-employment (full) pages of the tax return. You cannot claim qualifying care relief as well.

The profit method may suit you if your expenses and capital allowances are more than your qualifying amount.

Whichever method you use, your taxable profit from fostering is charged to Income Tax, and to Class 4 National Insurance if your profits are above the threshold.

"Do I need to register and send a tax return?"

• GOV.UK says you should register as self-employed when you start to foster, and you will need to send tax returns. Check with your fostering service what you need to do.
• You need to send a tax return even if all your fostering income is covered by qualifying care relief: you claim the relief on the self-employment (short) pages of the return.
• When you register as self-employed, you register for both Self Assessment and Class 2 National Insurance.
• If you need to send a tax return and have not sent one before, you must tell HMRC by 5 October after the end of the tax year. You could be fined if you do not.
• If you register after 5 October, HMRC sends you a letter with the date your tax return is due: 31 January, or 3 months from the date of the letter if that is later.
• After the tax year ends, a paper tax return is due by 31 October and an online tax return by 31 January. Any tax you owe is due by 31 January.

"Do I have to use Making Tax Digital?"

People who receive qualifying care receipts are exempt from Making Tax Digital for Income Tax in the 2026 to 2027 tax year (HMRC helpsheet HS236). For later tax years, check GOV.UK.

"What about National Insurance and my State Pension?"

• GOV.UK says foster carers may be entitled to National Insurance credits, which count towards the State Pension.
• A foster carer, or a kinship carer in Scotland, can apply to HMRC for Class 3 National Insurance credits. They are not given automatically.
• Apply online or by post using form CF411A (National Insurance credits for parents and carers). Foster and kinship carers must send supporting evidence with the form: HMRC's notes ask for a letter from the fostering service that placed the child with you, confirming you were an approved foster carer for the period you are claiming.
• Whether you qualify for credits for a particular week or child, and how many qualifying years you need for the State Pension, are not covered here: check your National Insurance record on GOV.UK, or ask HMRC.

"Who can use qualifying care relief?"

You can use qualifying care relief if children or adults are placed with you by:

• a local authority (council)
• a health and social care trust in Northern Ireland
• a fostering service provider
• a Shared Lives service provider

It covers foster care, shared lives care and kinship care. It also covers staying put care (a young person who was fostered keeps being cared for after their 18th birthday), parent and child arrangements where the parent is 18 or over and the child is not a looked after child, and supported lodging schemes unless the arrangement is more like landlord and tenant than family.

Private arrangements with friends or relatives do not qualify for the relief.

Your local authority can tell you if you are eligible for qualifying care relief, or if a child in your care is a looked after child.

"I live in Scotland, Wales or Northern Ireland"

Qualifying care relief is a UK tax relief. The fixed amount and weekly amounts are the same in England, Wales, Scotland and Northern Ireland. In Northern Ireland, children placed with you by a health and social care trust count.

Fostering rules, allowances and regulators are different in each nation, but this guide covers only tax and National Insurance.

Deadlines and timings

• 5 October 2026: tell HMRC if you need to send a tax return for the 2025 to 2026 tax year and have not sent one before.
• 31 October 2026: paper tax return for the 2025 to 2026 tax year.
• 31 January 2027: online tax return for the 2025 to 2026 tax year, and payment of any tax you owe.
• For the 2026 to 2027 tax year, which ends on 5 April 2027, the same dates fall a year later: 5 October 2027, 31 October 2027 and 31 January 2028.

Traps

• Do not mix tax years. A 2025 to 2026 tax return uses £19,690 with £415 and £495. The 2026 to 2027 tax year uses £20,440 with £435 and £515.
• The fixed amount belongs to the household, not to each carer. Two approved carers living together split it between them.
• A child moves up to the higher weekly amount in the week of their 11th birthday, not at the start of the next tax year.
• Qualifying care relief and your actual expenses cannot both be claimed for the same year.
• Looking after a friend's or relative's child by private agreement is not qualifying care.
• National Insurance credits for foster carers do not arrive on their own: you apply for them with form CF411A.