Qualifying Care Relief for Foster Carers 2026/27: How the Tax Exemption Works
How Qualifying Care Relief helps foster carers reduce or eliminate tax on fostering income in 2026/27, including the fixed amount, weekly per-child amount and Self Assessment rules.
What Is Qualifying Care Relief?
Qualifying Care Relief (QCR) is a tax simplification scheme designed specifically for approved foster carers, and also covers shared lives carers, staying put carers and some kinship and supported lodgings carers. Rather than requiring carers to track every individual cost of raising a foster child and calculating a taxable profit in the normal self-employed way, HMRC allows a generous fixed and per-child exemption that covers most or all of a typical fostering household's payments.
The result is that the great majority of foster carers in the UK pay little or no Income Tax on their fostering allowances, despite technically being self-employed and required to file a Self Assessment tax return each year.
How the Relief Is Calculated
Qualifying Care Relief for 2026/27 has two parts, added together to form your total tax-free threshold for the year:
1. Fixed amount: £18,140 per household, per tax year -- available in full regardless of how many children you foster or for how long.
2. Weekly amount per child:
| Age of child | Weekly amount |
|---|---|
| Under 11 | £375 |
| 11 and over | £450 |
The weekly amount is calculated separately for each child and for each week (or part-week) a child was placed with you during the tax year. If you foster two children all year, one aged 8 and one aged 14, your threshold would be the £18,140 fixed amount plus 52 weeks x £375 for the younger child plus 52 weeks x £450 for the older child.
If Total Income Stays Below the Threshold
If the total qualifying care payments you receive in the tax year are below your calculated threshold (fixed amount plus weekly per-child amounts), your taxable profit from fostering is treated as nil. You still need to register for Self Assessment and report the income, but no tax is payable on it.
This is the position most foster carers find themselves in, since local authority and independent fostering agency payment rates, while varying by region and the complexity of a child's needs, are usually designed to sit within or close to the QCR thresholds.
If Total Income Exceeds the Threshold
Where a carer's total qualifying care receipts are higher than their calculated QCR threshold -- for example, because they foster several children simultaneously, care for children with higher-needs payment bandings, or receive additional fees for specialist skills -- there are two options:
- Simplified method: Pay Income Tax and Class 4 National Insurance only on the excess above the QCR threshold.
- Normal profit method: Calculate profit as actual income minus actual allowable expenses, in the same way as any other self-employed trade.
Carers can choose whichever method produces the lower taxable figure each year, and can switch between methods from year to year if circumstances change.
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Foster carers are classed as self-employed for tax purposes and must register for Self Assessment with HMRC once they start receiving fostering payments, typically by 5 October following the end of the tax year in which fostering began. This is required even where the carer expects no tax to be due, because HMRC needs a return to confirm the QCR calculation and to record National Insurance contributions correctly.
The Self Assessment return is filed online by 31 January following the end of the relevant tax year (6 April to 5 April).
National Insurance for Foster Carers
Foster carers are self-employed for National Insurance purposes. Class 2 National Insurance has been largely abolished as a compulsory charge from April 2024 for those with profits above the small profits threshold, who now receive an automatic National Insurance credit instead. Carers with profits below the threshold, including many whose fostering profit is nil after QCR, can still choose to pay Class 2 voluntarily to protect their state pension entitlement and access to other contributory benefits such as new-style Employment and Support Allowance.
Class 4 National Insurance only becomes payable if taxable profit (after applying QCR) exceeds the lower profits limit, which is uncommon for most foster carers given the size of the relief.
Fostering Income and Benefits
Because Qualifying Care Relief is intended to cover the genuine costs of caring for a child rather than representing a wage, HMRC and the Department for Work and Pensions generally disregard qualifying care payments when assessing entitlement to means-tested benefits such as Universal Credit, Council Tax Support and Housing Benefit. This disregard is a key reason many carers can foster as their primary occupation without it undermining their overall household finances. Individual circumstances vary, so carers should confirm the specific treatment with their local authority welfare rights team or a specialist benefits adviser.
Practical Record-Keeping Tips
Even where no tax is due, good record-keeping makes annual Self Assessment filing straightforward:
- Keep payment schedules and statements from your fostering agency or local authority
- Record the start and end date of every placement, and each child's date of birth, to calculate weekly amounts accurately
- Retain any additional fee or allowance letters (for example, for children with additional needs)
- Keep evidence of any other self-employed or employed income to combine correctly on your return
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Frequently asked questions
What is Qualifying Care Relief?
Qualifying Care Relief is a special tax exemption scheme for approved foster carers, shared lives carers and some other carers of children and adults. It allows carers to receive fostering payments largely or entirely tax-free, using a generous fixed exemption plus a weekly amount per child in placement, instead of calculating profit in the normal way.
How much is the Qualifying Care Relief fixed amount?
The fixed amount is £18,140 per household per tax year (2026/27), available to every approved foster carer household regardless of how many children they foster, on top of which a weekly amount per child applies for each week or part-week a child is placed with them.
How much is the weekly amount per child?
The weekly amount is £375 per week for each child under 11, and £450 per week for each child aged 11 or over, added on top of the fixed household amount. These amounts are added together across all children fostered and all weeks in the tax year to calculate your total tax-free threshold.
Do foster carers need to register for Self Assessment?
Yes. Foster carers are treated as self-employed for tax purposes and must register for Self Assessment with HMRC, even if their total qualifying care income will end up being fully covered by the relief and no tax is due. Registration also protects entitlement to Class 2 or Class 4 National Insurance credits.
What happens if my fostering income exceeds my Qualifying Care Relief threshold?
If your total fostering payments exceed your personal threshold (fixed amount plus weekly amounts for all children and weeks), you have a choice: pay tax on the excess over the threshold, or use the normal profit method (income minus actual expenses) if that produces a lower taxable figure. Most carers find the simplified method more generous.
Do foster carers pay National Insurance?
Foster carers are treated as self-employed and can pay Class 2 National Insurance voluntarily (Class 2 has been largely abolished as a compulsory charge from April 2024 but remains available voluntarily for those with profits below the small profits threshold) to protect their state pension record, and Class 4 National Insurance if profits after relief exceed the relevant limits.
Does fostering income affect tax credits or Universal Credit?
Qualifying Care Relief payments are generally disregarded as income for most means-tested benefits, including Universal Credit, because HMRC and DWP recognise that fostering allowances are largely reimbursement for the cost of caring for a child rather than personal income. Specific rules should be checked with a benefits adviser for individual circumstances.
Can foster carers claim the Marriage Allowance or Personal Allowance normally?
Yes. Foster carers whose taxable fostering profit (after Qualifying Care Relief) is nil or low can still use their full Personal Allowance against any other income, and couples can consider Marriage Allowance transfers in the normal way if one partner has unused allowance.
What if I foster for only part of the tax year?
The fixed amount is not time-apportioned in the same way as the weekly amounts; the weekly per-child amounts are calculated only for the actual weeks a child is placed with you, so carers who start or stop fostering partway through the year, or have gaps between placements, simply total the weeks each child was actually in placement.
Do respite carers and short-term placements qualify for the relief?
Yes. Qualifying Care Relief applies to any approved foster placement arrangement, including respite care, short-term and emergency placements, and shared lives arrangements for adults, as long as the carer is approved by a registered fostering service or local authority.
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