Accountant for Foster Carers: Work Out What You Actually Owe

If you foster, you are self-employed for tax and HMRC expects a self assessment return from you each year. That sounds alarming and usually is not, because fostering payments are taxed under qualifying care relief (QCR), and most foster carers finish the sum owing nothing at all. The way to know is to do the arithmetic rather than read about it, so the sum comes first on this page and everything else follows it.

Your qualifying amount: the two parts

Qualifying care relief does not exempt fostering income. It gives you a threshold, called your qualifying amount, and you are taxed only on receipts above it. The qualifying amount has two parts added together.

The first is a fixed amount for the household, for a full tax year. The second is a weekly amount for each person you cared for, banded by age. Both are uprated most years, so the figures below are shown separately for each year and you use the set that matches the tax year of the return you are filing.

Part of the sum	2026/27	2025/26
Fixed amount per household, full year	£20,440	£19,690
Weekly, per child under 11	£435	£415
Weekly, per child aged 11 or over	£515	£495
Weekly, per adult cared for	£515	£495

On the adult row for 2026/27: gov.uk does not publish a separate adult figure for 2026/27; the adult amount has always matched the 11-or-over amount, and £515 is stated on that basis. Confirm with your Shared Lives scheme before you rely on it.

Earlier years are set out, with the sources, on our qualifying care relief page, which carries 2024/25 as well.

The 2025/26 figures come from HMRC's qualifying care relief helpsheet HS236 and its business income manual, which sets them out year by year. The 2026/27 fixed amount and the two child rates are the ones gov.uk publishes for foster parents as current, checked in August 2026. If you are filing the return due on 31 January 2027, that return covers the year to 5 April 2026, so it is the 2025/26 column you want, not the current one. Getting the column right matters more than any other decision on the return.

Two mechanical points that change the total. A week runs from a Monday, and any part week counts as a whole week, so a placement that starts on a Thursday still gives you that week in full. And the fixed amount belongs to the household, not to each carer: if two of you foster together in the same home, you share one fixed amount between you rather than counting it twice.

Yusuf's 2025/26 return, start to finish

Yusuf fosters in Durham and had two placements during 2025/26. All the figures below are his inputs, so you can swap in your own and redo it line by line.

Input	Yusuf's figure	Working
Fixed household amount, 2025/26	£19,690	Full tax year, one household
Child aged 9, in placement all year	£21,580	52 weeks x £415
Child aged 14, in placement 30 weeks	£14,850	30 weeks x £495
Qualifying amount	£56,120	£19,690 + £21,580 + £14,850
Total fostering receipts for the year	£48,300	Everything his fostering service paid him
Taxable profit from fostering	Nil	£48,300 is below £56,120

Yusuf pays no income tax and no Class 4 National Insurance on his fostering, because there is no taxable profit to charge. He still files a return, and he still records the receipts and the qualifying amount on it. That is the ordinary outcome for a foster carer, not a lucky one.

Now change one input. If Yusuf's receipts had been £61,000 rather than £48,300, the excess over his qualifying amount would be £61,000 minus £56,120, or £4,880. That £4,880 is his taxable profit. Sitting below the £12,570 personal allowance, and below the £12,570 point where Class 4 National Insurance starts, it would still produce a nil tax bill assuming he had no other income. Both of those figures are 2025/26 values and were still current when this page was checked in August 2026. Add a part-time job to the picture and the answer changes, because the personal allowance is used against total income, not against fostering alone.

Above the qualifying amount: two methods, chosen yearly

When receipts exceed your qualifying amount, you pick how the excess is worked out. The simplified method is the sum above: receipts minus qualifying amount, with no expense records required and no capital allowances. The profit method ignores qualifying care relief and computes an ordinary trading profit from receipts minus actual allowable expenses and capital allowances.

The election is made for each tax year, so a year of heavy vehicle or property costs can be computed one way and the following quiet year the other. You are not locked in by what you did last time. Our page on qualifying care relief explained takes the two methods apart in detail, with the year-by-year figures set out in full.

Which kinds of care are inside the relief

Qualifying care relief is wider than fostering. It also covers shared lives and adult placement care, kinship and friends and family placements, staying put arrangements where a young person remains with you past 18, parent and child placements, and supported lodgings. The condition is the route rather than the label: the placement must come through a local authority, a Health and Social Care Trust, an independent fostering service provider or a Shared Lives scheme. A private arrangement made outside those routes falls outside the relief and is taxed under ordinary rules, which is worth checking before you assume a placement counts.

Registering and the dates that matter

Fostering is a trade for tax, so the ordinary self-employment timetable applies. Register with HMRC for self assessment by the 5 October following the end of the tax year in which you started fostering, so a carer whose first placement arrived in June 2026 registers by 5 October 2027. File online and pay any balance by the 31 January after the tax year ends. The late filing penalty starts at £100 and applies even when the tax due is nil, which is the single most common way a foster carer with no liability ends up out of pocket.

Keep the payment statements from your fostering service, the placement start and end dates and the ages of the children. Those three things are the whole return. You do not need receipts for household spending if you use the simplified method, which is the point of it.

National Insurance when your profit is nil

This is the part most foster carers never get told, and it matters more than the tax. Since 6 April 2024 a self-employed person with profits at or above the small profits threshold is treated as having paid Class 2 National Insurance without handing over any money, and their state pension record is protected. A foster carer whose taxable profit is nil under qualifying care relief may sit below that threshold, and a year below it can be a year that does not count toward the 35 needed for a full new state pension.

There are routes that protect the record, including paying voluntary Class 2 contributions and National Insurance credits available to some carers. Which route fits depends on your figures and your circumstances, and the practical first step is to check your National Insurance record on gov.uk for gaps rather than assume a nil-tax year was a full year. Twenty minutes on that page is the highest-value thing a foster carer can do with their tax affairs.

How we work with foster carers

Fostering is care work, not a business you are trying to scale, and we price and run it that way. What we do is narrow on purpose: register you for self assessment, confirm the qualifying amount from your placement records, compute both methods where receipts are above it and use whichever gives the lower result, file the return, and tell you plainly when the answer is nil. Where you have other income, a job, a pension or property, we bring the fostering figure into the same return rather than treating it separately.

We do not sell fear about this. If your receipts sit comfortably under your qualifying amount and your affairs are otherwise simple, the return is genuinely something you can file yourself with the table above, and we will say so. It is worth paying someone when receipts exceed the qualifying amount, when placements moved around mid-year, when two carers in one household are splitting the fixed amount, or when fostering sits alongside other income and the interaction is doing something you did not expect.

Where to go next

For the relief itself, year by year, start with qualifying care relief explained. For the wider self-employment framework, deadlines, records and payments on account, the sole trader and self-employment hub covers it. And if you would rather have someone check the sum against your own placement records before 31 January, talk to us.