Fostering
Foster Carer Tax: Qualifying Care Relief and Record-Keeping
What Qualifying Care Relief (QCR) actually is
The idea in plain English
Qualifying Care Relief is a special tax scheme that recognises the unique costs of caring. If you’re an approved carer and your fostering payments for the year fall at or below your QCR “qualifying amount”, HMRC treats you as having no profit from caring—so you won’t pay Income Tax or Class 4 National Insurance on that fostering income. You still complete Self Assessment, but the calculation is simplified.
Which arrangements count
QCR covers foster care, shared lives care, kinship care, Staying Put (where a young person remains with you after 18), parent-and-child arrangements (where the parent is 18+ and the child is not looked after), and supported lodgings (unless the set-up is more like a landlord-tenant relationship). Private arrangements with friends or relatives don’t qualify.
How much is tax-free in 2025/2
Two parts make up your “qualifying amount”
For the tax year 6 April 2025 to 5 April 2026, your qualifying amount is made of:
- a fixed household amount of £19,690 (shared between carers in the same household), plus
- a weekly amount per person you care for: £415 per week for each child under 11, and £495 per week for each child 11+ or for each adult. These figures are set in law and uprated annually with inflation.
Pro-rating, sharing and what counts as a “week”
If you were approved for only part of the year, you pro-rate the £19,690 by days approved. If two carers in the same home are paid separately, you split the fixed amount equally. A “week” runs Monday to Sunday and a part-week counts as a full week for the per-person amounts.
Two ways to work out the tax
The simplified method (most common)
Add up your total fostering receipts (fees/reward, allowances, retainers, mileage payments, etc.). If the total is less than or equal to your qualifying amount, HMRC treats your profit as nil—no tax or Class 4 NIC on that income, though you still file. If your receipts exceed your qualifying amount, you can choose to be taxed only on the excess (receipts minus qualifying amount). This is the simplified route many carers use.
The profit method (useful in specific cases)
Alternatively, you can ignore QCR and work out profit in the usual self-employment way: receipts minus actual allowable expenses (and capital allowances). This can suit carers with exceptionally high, wholly and exclusively business-related costs. You’ll need fuller bookkeeping and you use the Self-employment (full) SA103F pages when you file.
Which should you pick?
If your recorded, allowable costs would take your profit lower than the simplified method, the profit method may win. If not, the simplified method is quicker and keeps your admin light. Either way, you decide year-by-year when you complete your return. Independent guidance from LITRG explains the trade-off clearly.
Worked examples with 2025/26 figures
Example 1: Under the threshold (no tax)
Amira looks after two children all year: one aged 8 and one aged 13. Her qualifying amount is: £19,690 (fixed) + 52×£415 = £21,580 + 52×£495 = £25,740 = £67,010. If her total fostering receipts are £64,000, she’s under £67,010—so her taxable profit from caring is nil under the simplified method. (She still files a return.)
Example 2: Slightly over the threshold (small profit)
Ben cares for one 15-year-old for the full year. Qualifying amount: £19,690 + 52×£495 = £25,740 = £45,430. If his receipts are £50,000, his simplified-method profit is £4,570 (£50,000 − £45,430). His personal allowance may cover some or all of that, depending on other income.
Example 3: When the profit method might help
Cara’s receipts are £80,000. Her qualifying amount (two teens, full year) is £19,690 + 2×(52×£495) = £70,? → £19,690 + 2×£25,740 = £71,170. On the simplified method her profit is £8,830. If her allowable business costs (e.g., business mileage where not reimbursed, certain equipment not covered by allowances) are higher than £8,830, the profit method could reduce her taxable profit further—but only if those costs are truly wholly and exclusively for the fostering trade and properly evidenced.
Do you still have to register and file?
Register as self-employed and file Self Assessment
Eligible carers are typically treated as self-employed for tax purposes. Even when your QCR reduces caring profit to nil, you should register with HMRC and complete a tax return each year, claiming QCR on the self-employment pages.
Which pages do you use?
If you’re using QCR (simplified method), HMRC directs you to the Self-employment (short) SA103S pages. If you choose the profit method, use SA103F and include your receipts and expenses in the usual way.
Accounting date and basis-period changes
QCR is applied on a tax-year basis (6 April–5 April). If your accounting date isn’t between 31 March and 5 April, you’ll apportion figures for the tax year. LITRG also notes basis-period reform rules if you keep a different year-end—use a standard 31 March/5 April year-end if you want to keep life simple.
National Insurance for foster carers
Class 2, Class 4 and credits
If your caring profit is nil (or low), you may not owe Class 4 NIC. For Class 2 NIC, you may be treated as having paid, pay voluntarily to protect benefits, or be eligible for credits (helping protect your State Pension record). LITRG explains the NIC options and how QCR interacts with them in more detail.
What records to keep (and why it matters)
The “simple records” minimum
HMRC says carers using QCR need only simple records—but don’t take that too literally. Keep the essentials so you can prove your calculation and switch methods if needed: all statements of payments from your fostering provider or council; the number of weeks each child/adult was with you (noting birthdays that change the rate); and a running note of any care-related costs.
Good practice for everyday admin
Maintain a placement log with start/end dates, a simple week-counter (Mon–Sun), and the person’s age band. Store mileage logs, appointment notes, and any receipts for items you paid for that weren’t otherwise covered. Even if you end up using the simplified method, these records let you compare it with the profit method before you file. LITRG sets out a practical checklist of what to keep.
Special points carers often ask about
Shared Lives “cap” vs fostering
QCR applies to Shared Lives too, but there’s a limit if you care for more than three adults at the same time; that cap does not apply to fostering, and siblings are treated as one person for the cap test.
Staying Put, parent-and-child and supported lodgings
All three can be covered by QCR when arranged through the local authority or an approved provider (with the tenancy-like caveat for supported lodgings). If you’re unsure which scheme your arrangement falls under, check with your local authority/provider so you use the right rules on your return.
Personal Allowance still applies
If you do have a taxable caring profit, your Personal Allowance (and any other income) still matters—QCR doesn’t remove your PA; it simply reduces the caring profit first. LITRG’s guidance explains how the pieces fit together.
Keeping your figures current
Why you’ll see different numbers online
Some pages still show 2024/25 QCR amounts. For 2025/26, the fixed amount is £19,690 and the weekly amounts are £415/£495, confirmed by the statutory instrument introducing indexation from 2025/26 onward and reflected in the HMRC Business Income Manual and reputable tax sources. If a page shows different 2025/26 figures, default to the law and HMRC manuals.
Bottom line
QCR is designed to keep your tax admin manageable while recognising the real costs of caring. For 2025/26, build your total using £19,690 per household plus the weekly per-person rates (£415 under 11; £495 aged 11+ or adult), compare your receipts to that figure, and then pick either the simplified or profit method. Keep clean records of payments, weeks and ages, and any costs you might need. If in doubt about Self Assessment pages, NIC or which method to use this year, read HMRC’s HS236 alongside the 2025/26 indexation rules, or ask a tax adviser who understands fostering.