Find out if you could be a foster carer
In a few simple questions, you’ll know if you’re suitable to apply to become a foster carer.
Foster carers are usually exempt from paying income tax on the fostering allowance thanks to Qualifying Care Relief, also known as Foster Care Relief. But there are other taxes you may need to pay.
When I first became a foster carer, I was worried that I didn’t know anything about tax! But my social worker put me right at ease. Now, every year when the time comes, I don’t panic about filling in my tax assessment.
The foster care tax allowance for 2025 is made up of your basic tax allowance plus an individual child allowance for each child you are looking after. This allowance is also known as Qualifying Care Relief.
The basic tax allowance for 2025 is £19,360 for each household for a full year.
The allowance per child is:
Qualifying Care Relief (formerly called Foster Care Relief) allows foster carers to receive payments from their fostering service up to their tax threshold without being liable to pay any tax. It covers foster care, shared lives care, Staying Put care (for young people who are fostered after their 18th birthday) and parent and child fostering.
Because the Qualifying Care Relief threshold is generous, most National Fostering Group foster carers do not pay any tax at all. A small number pay tax on the amount they earn over the tax threshold.
Another benefit of Qualifying Tax Relief is that you don’t have to keep complicated accounts. At the end of the financial year (5th April), you work out if you owe any tax to HM Revenue & Customs (HMRC) using this simple calculation:
Read on for more details on how to do this.
Follow these 3 steps to work out if you owe tax on your foster care income.
As a foster carer, when you submit a tax return at the end of the financial year you will need to work out your own unique tax threshold. Here is how to do it:
You need to know how much National Fostering Group paid you during the tax year. This should be straightforward as we supply you with an end-of-year statement after the 5th April showing the total amount. It will include:
Compare your totals: (1) your tax threshold and (2) total payments from National Fostering Group:
The first year we had to do our tax forms, I wasn’t sure where to start. However after meeting other carers, who have been fostering for many years, they helped us with the tax forms. You will always find someone in your support network can answer any questions you have.
Here are a few more things that can affect the income tax you pay as a foster carer:
The personal tax allowance states how much taxable income you can earn before you start paying income tax. The current personal allowance for most people is £12,570 (for the 2024/25 and 2025/26 tax years). If your fostering payments exceed the Qualifying Care Relief threshold, you may be able to use your personal tax allowance to offset your tax liability. This is normally possible if you are a full-time foster carer with no earnings from elsewhere.
If you are fostering as a couple, you can choose whether one of you will declare all of the fostering income as the main carer, or if you will split your income as a partnership. Usually, couples only register as a partnership when they both foster on a full-time basis and their household income from fostering takes them over the Qualifying Care Relief tax threshold. Not all couples do this though – it depends on what makes best financial sense in your particular situation. We can give you more information on this to help you make your decision.
As a foster carer, you will pay your tax as a self-employed individual. This means you will need to register as self-employed with HMRC and will need to keep an accurate record of your earnings.
Once you have been approved as a foster carer, you must register as self-employed with HMRC. You will need to do this within 6 months of the end of the tax year in which you were approved – which means by 5 October.
You can register as self-employed online, which is HMRC’s preferred method. Alternatively, you can complete a CWF1 form or call the Newly Self-Employed Helpline on 0300 200 3310. You’ll need to tell them your National Insurance number and when you were approved as a foster carer.
Once you are registered as self-employed you will be given a unique taxpayer reference (UTC) so you can use the online service to submit your self-assessment tax return online.
Qualifying Care Relief has made the self-assessment tax returns process for self-employed foster carers much more simple. Some prospective foster carers say they are worried by the idea of keeping their own accounts, but there’s really no need to worry. It’s straightforward to work out your earnings and tax liability and there’s plenty of support if you need it. You shouldn’t need to employ an accountant, even if you make a profit. However, some foster carers with more complex finances may decide to employ an accountant.
You can get more information from HMRC’s self-employed Income Tax helpline and training, support and development for foster carers. In addition, if you’ve been approved as a foster carer with us, you automatically get membership to The Fostering Network, which provides free advice via its helpline on 0207 401 9582 or email.
Here at National Fostering Group, we’re always happy to discuss any tax questions or concerns you have. The best way to get more information is to fill out our enquiry form and we’ll be in touch.
Yes, foster carers do pay National Insurance Contributions, also known as NICs. Making these payments means that you are eligible to receive a state pension and other benefits.
As a self-employed individual, you are eligible for Class 2 and Class 4 National Insurance payments. All foster carers must register for Class 2 contributions. In some cases, you may need to pay Class 4 contributions as well.
The amount of National Insurance you need to pay is based on your taxable profit each year. You can learn more about fostering and National Insurance here.
Yes, foster carers do pay council tax. Being a foster carer doesn’t qualify you as exempt from making council tax payments, however, other criteria may still apply.
For example, if you are the only adult living in your household, you will be eligible for a 25% reduction in your council tax. This still applies if you have a foster child living with you.
For questions about council tax and your specific situation, contact your local council for support.
We’re always happy to discuss any tax or National Insurance concerns you have. The best way to get more information is to fill out our enquiry form. If you ask for a call back, an advisor from your local National Fostering Group team will get in touch to explain more about how to become a foster carer, and answer any questions you have about foster care pay and Income Tax.
