Pillar Guide · Updated July 2026
Qualifying Care Relief for Foster Carers: A Complete 2026/27 Guide
Qualifying Care Relief lets approved foster carers, shared lives carers and some kinship carers receive fostering payments largely or entirely tax-free. This pillar guide explains the 2026/27 fixed household amount of £18,140, the weekly per-child amounts of £375 (under 11) and £450 (11 and over), exactly how to calculate your personal threshold, what happens if your income exceeds it, and the Self Assessment and National Insurance rules every foster carer needs to know.
What Is Qualifying Care Relief
Qualifying Care Relief (QCR) is a tax simplification scheme designed specifically for approved foster carers, and it 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 calculate 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.
| Component | 2026/27 amount |
|---|---|
| Fixed amount (per household) | £18,140 per tax year |
| Weekly amount — child under 11 | £375 per child per week |
| Weekly amount — child 11 or over | £450 per child per week |
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, then all weekly amounts across all children are added to the single £18,140 fixed amount to produce your total threshold for the year.
Worked Example
Suppose a household fosters two children for the full 52-week tax year: one aged 8 and one aged 14. The household's Qualifying Care Relief threshold is:
- Fixed amount: £18,140
- Child aged 8 (under 11): 52 weeks x £375 = £19,500
- Child aged 14 (11 or over): 52 weeks x £450 = £23,400
- Total threshold: £61,040
If the household's total qualifying care payments for the year are £61,040 or less, its taxable profit from fostering is nil. If payments exceed £61,040, tax is only calculated on the excess above that figure (or the carer can use the normal profit method if it produces a lower taxable figure — see below).
If Income Stays Below the Threshold
If the total qualifying care payments received in the tax year are below the calculated threshold (fixed amount plus weekly per-child amounts), taxable profit from fostering is treated as nil. Registration for Self Assessment and reporting the income is still required, 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 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.
Registering for Self Assessment
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 applies 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.
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