Foster carers are classed as self-employed and benefit from a scheme called Qualifying Care Relief, which means that, in most cases, the income you receive from fostering is tax-free.
But there are still a few areas of tax to be aware of — including National Insurance and council tax — and a simple yearly calculation to check whether you owe anything.
In most cases, no. As a foster carer, you receive a generous tax-free threshold through the Qualifying Care Relief scheme. This covers both a base allowance and an additional weekly allowance for every child you care for.
So unless your fostering income exceeds that combined threshold, you won’t owe any income tax.
However, you do need to register as self-employed, submit a tax return each year, and check if you’ve earned over the threshold.
Here’s how the Qualifying Care Relief allowance works:
👉 Example: If you foster two children aged 12 for the full year, your total tax-free threshold would be:
Unless your fostering income exceeds that amount, you won’t pay tax.
Compare the two figures
If your income is below your threshold, you owe no tax.
If it’s above, only the amount over the threshold is taxable.
As a self-employed foster carer, you may need to pay Class 2 National Insurance Contributions (NICs) — and possibly Class 4, depending on your taxable profit.
These contributions help you build entitlement to the State Pension and other benefits. In some cases, if your income is low, you might qualify for NI credits instead.
Foster carers do still pay council tax. However, you may be eligible for reductions depending on your situation — for example, a 25% discount if you live alone with foster children. For personalised advice, contact your local council.
If you foster as a couple, you can choose whether one person declares all fostering income, or whether you register as a partnership. What’s best depends on your circumstances, but most couples only register as a partnership if both are full-time foster carers. We’re happy to advise on the best route for your household.
Not usually! The Qualifying Care Relief scheme keeps things simple — and most foster carers handle their own tax return without needing professional help. However, if you have other income or more complex finances, using an accountant is optional.
You’ll need to register with HMRC as self-employed by 5 October in the tax year following your approval.
You can register:
Once registered, you’ll receive a Unique Taxpayer Reference (UTR) and will be able to file your tax return online.
👉 For help with this, see our Self-Employment for Foster Carers page.
We know tax can feel overwhelming at first — but there’s lots of support available, from us, your supervising social worker, and national foster care resources.
You also get free membership to The Fostering Network, which includes tax advice and a dedicated helpline.
If you’d like someone to talk you through it, just fill out our enquiry form and we’ll call you back. We’re here to make sure your finances feel as supported as the work you do.
