Do I have to become self‑employed?

Deciding whether to work as a foster carer on a self‑employed basis can feel overwhelming. Many people wonder if they must register as a sole trader or if they can simply work through a local authority or an agency. This guide explains the options, the legal and financial implications, and how to choose the route that best fits your circumstances. It is written for anyone in London who is considering fostering and wants a clear, factual overview of what self‑employment means in practice.

What is self‑employment in fostering?

Self‑employment means that you are not an employee of a local authority or a fostering agency. Instead, you run your own business as a foster carer. You are responsible for your own taxes, National Insurance contributions and record‑keeping. You can claim certain expenses and you have the flexibility to set your own hours.

When might self‑employment be required?

In most cases, local authorities and independent agencies do not require you to be self‑employed. However, there are situations where self‑employment becomes necessary:

• Agency‑based placements: Some agencies prefer or require their carers to be registered as sole traders so they can issue invoices directly.
• Specialised placements: Therapeutic or residential fostering that involves additional services may be billed separately, making self‑employment convenient.
• Flexibility needs: If you want to foster children of different ages or types (e.g. short‑term, long‑term, respite) without the constraints of a single contract, you may opt for self‑employment.

Agency‑based fostering vs independent fostering

Local authorities usually employ foster carers directly. They pay a standard allowance and cover most administrative tasks. Independent agencies may offer a higher allowance but often require you to be a sole trader so they can manage payments and compliance.

Tax and National Insurance implications

As a self‑employed foster carer, you must register with HM Revenue & Customs (HMRC) as a sole trader. You will file a Self‑Assessment tax return each year and pay Class 2 and Class 4 National Insurance contributions. You can claim allowable expenses such as travel, food and home adaptations, but you must keep accurate records.

Alternatives to self‑employment

Working through a local authority

Local authorities employ foster carers under a contract. They pay a standard allowance and provide support, training and supervision. You do not need to register with HMRC as a sole trader. However, you may have less flexibility in choosing placements and the allowance may be lower than what some agencies offer.

Working with an independent fostering agency

Many agencies employ foster carers on a contractual basis. They handle paperwork, training and some payments. Some agencies will ask you to be self‑employed to simplify invoicing, but many will offer a salaried contract. The choice depends on the agency’s policies and your personal preference.

How to decide if self‑employment is right for you

Assessing your circumstances

Consider the following:

• Financial stability: Do you have a steady income outside fostering?
• Administrative capacity: Can you handle tax returns and record‑keeping?
• Flexibility: Do you need to foster at irregular times or in multiple locations?
• Support network: Do you have access to a mentor or a local authority supervisor?

Legal and financial considerations

Before you decide, check:

• Whether the local authority or agency requires self‑employment.
• How the allowance compares to the costs you will incur.
• Whether you can claim tax relief on fostering expenses.

Practical steps if you choose self‑employment

Registering as a sole trader

Visit the HMRC website and register online. You will receive a Unique Taxpayer Reference (UTR) and a National Insurance number if you do not already have one.

Keeping records

Maintain a separate ledger for fostering income and expenses. Keep receipts for travel, food, and home adaptations. Use simple accounting software or a spreadsheet.

Claiming expenses

Only allowable expenses can be claimed. Typical claims include:

• Travel mileage and fuel costs.
• Food and household items used for the child.
• Home modifications to meet safeguarding requirements.

Refer to the Bedroom, Pets and Space Home Requirements for Fostering guide for specific expense categories.

Support, training and supervision for self‑employed foster carers

Even if you are self‑employed, you must receive training and supervision. Local authorities and agencies provide:

• Initial induction covering child protection and safeguarding.
• Ongoing training on health, education and behavioural support.
• Regular supervision visits to discuss placement progress.

Self‑employed carers can also access peer support groups and online resources. The Mockingbird Constellations Peer Support page offers useful contacts.

Common challenges and realistic expectations

Self‑employment does not guarantee higher income. You must:

• Manage your own workload and avoid over‑extension.
• Balance fostering with any existing employment or family commitments.
• Stay updated on legislation changes that affect allowances and tax.

Many carers find that the flexibility of self‑employment outweighs the administrative burden, especially if they foster children with complex needs or in varied settings.

Frequently Asked Questions

1. Do I need a spare room to foster?

No. The requirement is that you have a suitable space that meets safety and space guidelines, not necessarily a spare room. See the Bedroom, Pets and Space Home Requirements for details.

2. Can I foster while I am on Universal Credit?

Yes, but you must declare fostering income on your Universal Credit claim. The allowance you receive may be reduced accordingly. For more information, read Fostering and Universal Credit Benefits.

3. Will I get maternity or paternity leave as a self‑employed foster carer?

Self‑employed carers are not entitled to statutory maternity or paternity leave. However, you can negotiate a leave arrangement with the local authority or agency if you are on a contract. The Do Foster Carers Get Maternity or Paternity Leave? page explains the options.

4. Do I need a driving licence to foster?

A driving licence is not mandatory, but it can be beneficial, especially if you need to travel to different placements or pick up supplies. Some agencies may require it for certain placements. Check the specific requirements of the agency or local authority.

5. How often will a social worker visit my home if I am self‑employed?

Visits are determined by the local authority’s safeguarding policy, not your employment status. Typically, a social worker will visit every few weeks to assess the child’s welfare and the home environment. The How Often Will Social Workers Visit? page offers guidance.

6. Can I become a foster carer if I have my own children?

Yes, many foster carers have their own children. The local authority will assess your suitability, ensuring that your children’s needs are met and that you can provide a stable environment for the foster child.

7. What checks are done for fostering in 2025?

Checks include a full background check, a DBS check, a health assessment, and a safeguarding interview. The What Checks Are Done for Fostering? page lists all the steps.

8. How long does the fostering process take?

From the initial application to the first placement, the process can take several months, depending on the complexity of the case and the availability of suitable placements. For a detailed timeline, see the How Long Does the Fostering Process Take? article.

9. Can I foster if I rent my home?

Renting is acceptable, but you must obtain permission from your landlord and meet the home safety criteria. The Can I Foster if I Rent? page explains the process.

10. Is there an age limit for foster carers?

There is no upper age limit, but you must be physically able to meet the demands of fostering. The Is There an Age Limit for Foster Carers? article provides further details.