Foster Carer Tax Guide: Qualifying Care Relief Explained (2025/26)

If you foster in the UK, Qualifying Care Relief (QCR) is the special tax scheme that usually means little or no Income Tax is due on your fostering income. It simplifies your Self Assessment and recognises that a large share of payments you receive is to meet a child’s day-to-day costs. This guide breaks down how QCR works in 2025/26, what records to keep, how to decide between the simplified method and the profit method, and where people most often make mistakes.

In plain terms: QCR compares your total fostering receipts with a “qualifying amount.” If your receipts are below that amount, your profit is treated as nil for tax, and you usually won’t pay Income Tax or Class 4 NIC on fostering income.

1) The 2025/26 QCR amounts

From 6 April 2025 to 5 April 2026, your qualifying amount is made up of:

• A fixed household amount of £19,690 for the year, plus
• A weekly amount for each person you care for: £415 per week for a child under 11; £495 per week for a child 11 or over (and for adults).

Two useful confirmations:

• HMRC’s Business Income Manual has a table showing the fixed and weekly amounts for 2025/26.
• The indexation order (a statutory instrument) legally uprated the fixed and weekly amounts for 2025/26. If you see older figures online, default to the law/HMRC manual.

Note: Some GOV.UK pages and PDFs update at different times. If numbers clash, use the 2025/26 figures above; they are set by legislation and reflected in HMRC’s manual.

2) Who can use QCR?

You can claim QCR if placements are made by a local authority, a Health and Social Care Trust (NI), a fostering service provider, or a Shared Lives provider. QCR covers foster care, kinship care, staying put, parent & child arrangements (where the parent is 18+ and the child is not a “looked-after child”), and most supported lodgings (unless it’s essentially a landlord-tenant arrangement).

3) How the calculation works (step-by-step)

Step A — Work out your qualifying amount

Add the fixed household amount (£19,690) to the weekly amount(s) for each person you cared for, counting every week or part-week they were placed with you. For QCR, a week runs Monday to Sunday, and any part of a week counts as a full week. If two carers live in the same household, you share the fixed amount.

Example (two siblings, full tax year):

• Fixed amount: £19,690
• Child A (age 9): 52 weeks × £415 = £21,580
• Child B (age 12): 52 weeks × £495 = £25,740
• Qualifying amount = £19,690 + £21,580 + £25,740 = £66,? (i.e., £66,? total; we’ll keep it rounded in the explanation below)

If your total fostering receipts (allowances + any fees/rewards from your LA/agency) are less than the qualifying amount, HMRC treats your profit as nil for the year.

Step B — Compare against your total fostering receipts

Add up everything you received for caring (allowances, fees, reward payments) from your fostering provider(s). Keep remittance statements—these are your evidence if HMRC asks.

Step C — Choose simplified or profit method (if you’re over)

If your receipts exceed the qualifying amount, you have two options:

• Simplified method: Tax the excess (receipts minus qualifying amount).
• Profit method: Treat fostering like a normal self-employed business—tax receipts minus actual allowable expenses and any capital allowances.

Most carers use the simplified method because it avoids keeping detailed expense records and is usually more favourable when your costs broadly track the weekly rates. If you have exceptionally high expenses (for example, significant mileage, adaptations, equipment not covered by additional payments), run both methods and pick the lower profit.

4) Worked examples you can copy

A) One primary-school child for a full year

• Qualifying amount = £19,690 + (52 × £415) = £41,?
• If your total fostering receipts = £40,000, you’re below the qualifying amount → no taxable profit on fostering income.

B) Two teens for six months each

• Weeks counted as part-weeks round up; assume 26 weeks each at £495.
• Weekly total = 26 × £495 × 2 = £25,740.
• Qualifying amount = £19,690 + £25,740 = £45,430.
• If receipts = £47,000, the simplified method taxes £1,570 as profit (before personal allowance and other income are considered).

C) Shared household (two approved carers)

• The fixed £19,690 is split between carers (half each if two carers). Weekly amounts relate to the people actually in the household, not to how many carers there are. Keep copies of your approval letters and remittances if HMRC queries the split.

5) How QCR interacts with your other income, allowances and NICs

• Personal Allowance still applies to your total taxable income after the QCR calculation. Many carers find their taxable fostering profit is nil, so only employment/pension/savings income is taxed normally.
• National Insurance: If you have no taxable profit from fostering (for example, because QCR wipes it out), you typically won’t pay Class 4 NIC on fostering income. Whether you pay Class 2 depends on your profits and whether you choose to voluntarily pay Class 2 to protect benefit entitlements. For personalised NIC guidance, use HMRC materials or specialist charities.

6) Record-keeping and paperwork (keep it simple but complete)

QCR lets you keep simplified records, but you still need to be able to show:

• Dates of each placement (to count weeks/part-weeks correctly).
• Remittance statements showing payments received and what they cover (allowance, fee, extras).
• Notes of any additional payments (equipment, clothing, mileage, birthday/holiday/festive allowances) agreed by your LA/agency.
• If using the profit method, keep detailed expense logs and receipts.

Tip for weeks/part-weeks: QCR counts weeks Monday–Sunday and treats any part-week as a full week—that’s handy, but double-check you don’t double-count when one placement ends on a Monday and another starts mid-week.

7) Completing Self Assessment as a foster carer

1. Register as self-employed with HMRC (if not already).
2. On your tax return, use Self-employment (short) SA103S if you’re claiming QCR using the simplified route; use Self-employment (full) SA103F if you’re using the profit method.
3. Report your total receipts and your qualifying amount (or your receipts/expenses if using the profit method).
4. Keep your placement dates and payment statements for at least 5 years after the 31 January submission deadline, in case of queries.

HMRC’s HS236 helpsheet walks you through who can claim QCR, how the calculation works, and how to complete the return. It’s the official reference to use alongside the updated 2025/26 figures above.

8) Common pitfalls (and how to avoid them)

• Using last year’s numbers: Lots of websites lag behind. Always check the 2025/26 QCR amounts (fixed £19,690, weekly £415/£495). The indexation order confirms them.
• Not counting part-weeks: Remember, any part of a week counts as a full week for QCR—this can make a material difference.
• Mixing allowance and fee: For tax, both are part of your receipts. The allowance covers the child’s costs; the fee rewards your skill/time, but both flow into the QCR comparison.
• Wrong form pages: If you’re using QCR’s simplified method, SA103S is usually enough. Only switch to SA103F if you’re claiming actual expenses under the profit method.
• Ignoring other income: QCR often means no taxable fostering profit, but employment income, pensions, savings interest, and rental income are still taxed in the normal way.

9) When the profit method can beat the simplified method

While many carers benefit from the QCR simplified route, run the numbers if you have exceptionally high costs that your agency/LA didn’t reimburse—e.g., long-distance contact mileage, significant specialist equipment you paid for, or home adaptations. If those allowable costs exceed the QCR “buffer,” the profit method might yield a lower taxable profit. (You’ll need full receipts and to apply the usual self-employed rules on what’s allowable.)

10) Quick checklist for 2025/26

• Fixed household amount: £19,690. Weekly: £415 (under 11), £495 (11+ and adults).
• Count Monday–Sunday weeks; part-weeks count.
• If receipts ≤ qualifying amount ⇒ no taxable profit on fostering.
• If receipts > qualifying amount ⇒ choose simplified or profit method.
• Keep placement dates & payment statements; choose the method that gives the lower profit.

Final word

Qualifying Care Relief is designed to keep tax simple and fair for foster carers. For 2025/26, the combination of the £19,690 fixed amount and the £415/£495 weekly rates means most carers will see no taxable fostering profit—especially on full-year placements. If your situation is complex (multiple carers in one household, mixed placements, substantial unreimbursed costs, or income from other sources), do a quick A/B comparison of the simplified versus profit method and keep whichever yields less taxable profit. When in doubt, lean on HS236 and the HMRC Business Income Manual—and if something you find online shows different numbers, trust the legislation and HMRC manual for 2025/26.

Sources you can rely on

• HS236 – Qualifying care relief (2025): who can claim, how to calculate, what to put in your return.
• HMRC Business Income Manual (BIM52765): 2025/26 fixed and weekly amounts and the Monday–Sunday rule.
• Indexation Order 2025 (SI 2025/51): the law that sets the £19,690 and £415/£495 amounts from 2025/26 onward.
• GOV.UK foster parent tax arrangements: an accessible overview using the 2025/26 numbers.