Foster Care Qualifying Care Relief vs Childminder Self-Employment: 2026/27 Comparison
Approved foster carers benefit from a specific tax exemption called Qualifying Care Relief, which shelters most or all of their fostering income from Income Tax. Registered childminders, by contrast, are ordinary self-employed traders who pay tax on their profit in the normal way, using either actual expenses or HMRC's simplified expenses flat rates. This guide compares how each is taxed for 2026/27.
Key facts for 2026/27
- Qualifying Care Relief (QCR) gives foster carers a fixed annual tax exemption for their household, plus a further weekly amount per child or young person placed with them — the exact threshold and weekly amounts are uprated periodically, so check the current figures at gov.uk before completing a Self Assessment return.
- Foster carers with total fostering income below their personal QCR threshold pay no Income Tax and no Class 4 National Insurance on that income at all — it is entirely exempt, not merely relieved.
- Registered (Ofsted-registered) childminders are ordinary self-employed traders and must register for Self Assessment, declaring their full income and deducting either actual allowable business expenses or HMRC's simplified expenses flat rates for things like use of home.
- Class 2 National Insurance has been abolished for most self-employed people from April 2024 — childminders now typically pay only Class 4 NI, at 6% on profits between £12,570 and £50,270 and 2% above that, under the rates confirmed for 2026/27.
- A person who both fosters and separately runs a registered childminding business must keep the two activities distinct — Qualifying Care Relief only applies to fostering (and certain other forms of approved care), not to ordinary paid childcare for unrelated children outside a fostering placement.
Side-by-side comparison
| Feature | Foster Carer (Qualifying Care Relief) | Registered Childminder |
|---|---|---|
| Basic tax treatment | Income exempt up to the Qualifying Care Relief threshold for the household plus weekly amounts per child | All profit is taxable business income |
| Above the QCR threshold | Can choose the simplified (fixed profit) method or work out actual profit and loss | Must always calculate actual profit or use simplified expenses flat rates |
| National Insurance | No NI due on income within the QCR exemption; Class 4 may apply only above it under the simplified method | Class 4 NI due at 6% (£12,570-£50,270) and 2% above, per 2026/27 rates |
| Self Assessment required | Only if fostering income exceeds the QCR threshold, or to claim National Insurance credits | Yes — always required as a self-employed trader |
| Business expenses | Not usually needed — the QCR exemption already covers costs of caring | Must claim actual expenses or simplified expenses flat rates to reduce taxable profit |
| Regulatory registration | Approved and supervised by a fostering service (local authority or independent agency) | Ofsted (or equivalent UK nation regulator) registration required to operate legally |
| State Pension qualifying years | Class 2 National Insurance credits can often be claimed even with no tax liability, protecting State Pension record | Qualifying years earned through Class 4 NI paid on profits above the Lower Profits Limit |
How Qualifying Care Relief actually works
Qualifying Care Relief (QCR) is a specific HMRC tax exemption available to approved foster carers, and to certain other approved carers such as those providing Shared Lives care or supported lodgings. It works by giving each household a fixed annual tax-free amount, plus an additional weekly tax-free amount for every child or young person placed with them during the year (with a higher weekly rate for children over 11 than under 11). Together, these two components form the household's total QCR threshold for the tax year.
If total fostering income for the year is below the household's QCR threshold, the carer pays no Income Tax and no Class 4 National Insurance on that income at all — it is treated as fully exempt rather than merely relieved by expenses. Given typical fostering allowances, most single or occasional foster placements fall comfortably within the threshold, meaning many foster carers have no tax to pay on their fostering income whatsoever.
If income exceeds the threshold, carers can choose between two methods to calculate the taxable profit on the excess: the simplified method (a fixed profit calculated using HMRC's set formula) or the actual profit method (income minus actual allowable expenses). Most carers use the simplified method because it avoids the need to keep detailed expense records, though the actual method can be more advantageous for carers with unusually high genuine costs.
How registered childminder self-employment is taxed
A registered childminder operating from home caring for other people's children (not as part of an approved fostering placement) is treated by HMRC as an ordinary self-employed trader running a childcare business. All fees received are business income, and the childminder must register for Self Assessment, keep records, and file a tax return declaring profit each year.
To arrive at taxable profit, childminders deduct allowable business expenses — food, toys, outings, insurance, a proportion of household running costs for the space used for childminding, and so on — either using actual costed expenses or HMRC's simplified expenses flat rates, which include a fixed daily rate to cover the additional costs of caring for children in the home without needing to apportion every individual bill.
Profit above the Income Tax Personal Allowance is taxed at the normal 20%/40%/45% rates for 2026/27, and Class 4 National Insurance applies at 6% on profits between the Lower Profits Limit (£12,570) and Upper Profits Limit (£50,270), and 2% above that. Class 2 National Insurance has been abolished for most self-employed people from April 2024, though voluntary Class 2 payment may still be relevant in specific low-profit cases to protect benefit entitlement.
What happens if you both foster and childmind
Some approved foster carers also run a separate registered childminding business caring for unrelated children who are not part of a fostering placement. In this situation, the two income streams must be kept entirely separate for tax purposes: fostering income benefits from Qualifying Care Relief, while childminding income for other families' children is ordinary self-employed trading income taxed in full.
It is not permitted to apply Qualifying Care Relief to ordinary childminding fees, and HMRC expects clear record-keeping showing which income relates to which activity if a carer undertakes both.
Anyone considering combining fostering with a separate childminding business should take specialist advice from an accountant experienced with both regimes, since the interaction between the two — particularly around National Insurance credits and Self Assessment reporting — can be more complex than either activity alone.
Verdict
Approved foster carers benefit from a significantly more favourable tax position than registered childminders, because Qualifying Care Relief exempts most typical fostering income entirely, rather than merely allowing expenses to be deducted from taxable profit.
Registered childminders are taxed as ordinary self-employed traders and should make full use of either actual expenses or HMRC's simplified expenses flat rates to minimise taxable profit, and should budget for Class 4 National Insurance on profits above the Lower Profits Limit.
Anyone combining both activities must keep fostering and childminding income entirely separate, since Qualifying Care Relief only applies to approved fostering (and similar approved care) income, never to ordinary paid childminding for unrelated families.