Qualifying Care Relief (QCR) and National Insurance

Thanks to generous tax relief from HM Revenue & Customs, our foster parents are highly unlikely to pay any tax on their fostering income.

By joining Fostering People, you will gain free membership to Foster Talk and their specialist fostering tax advice and support.

Tax exemption

HMRC provides a fixed tax exemption called Qualifying Care Relief of up to £19,360 per year. This tax exemption is shared equally between all foster parents in the same household. This tax exemption means you won’t pay tax on the first £19,360 you earn from fostering.

Qualifying tax relief

You will also benefit from a weekly tax relief while you have a child placed in your care. This tax relief is on top of the £19,360 tax exemption and is for each child in your care.

The weekly amount of tax relief is dependent on the age of the foster child in your care:

For each child under the age of 11 in your care, you will benefit from a tax relief of £405 each week.

For each child aged 11 or over in your care, you will benefit from a tax relief of £485 each week.

We have included some examples for you on this page, however in very simple terms, if you foster with Fostering People, you won’t pay any tax on your fostering income.

Example 1

Susan fosters full time, she fosters a 15 year old girl, long term so has cared for her for a full year.

Tax relief £19,360

Tax exemption for 52 weeks at £485 £25,200

Susan’s total fostering allowance £26,270

Total tax threshold for fostering £44,560

Susan receives a fostering allowance of £26,270 which is below the threshold, so Susan will not be eligible to pay tax.

Example 2

Steve fosters 2 boys aged 12 and 15 years for a full tax year, but also fosters a 10 year old alongside for 42 weeks.

Tax relief £19,360

Tax exemption for 52 weeks at £450 x 2 £50,440

Tax exemption for 42 weeks at £375 £17,010

Steve’s total fostering allowance £73,588.16

Total tax threshold for fostering £86,810

Steve receives a fostering allowance of £73,588.16 which is below the tax threshold, therefore Steve’s fostering income is tax free.

Example 3

Lisa is a foster parent for 3 teenagers. The eldest has disabilities and needs medical support for which Lisa receives an enhanced fostering allowance. Lisa has been caring for the young people for over a year.

Tax relief £19,360

Tax exemption for 52 weeks at £450 x 3 = £75,660

Lisa’s total fostering allowance £94,711

Total tax threshold for fostering £95,020

Lisa’s receives a fostering allowance of £94,711 which is below the tax threshold, therefore Lisa’s fostering income is tax free.

Tax depends on your personal circumstances and other sources of income, but with expert tax advice from Foster Talk this will be simple for you. Foster Talk’s tax accountants can even manage your tax return on request for a small administration fee.

National Insurance Contributions (NICs)

Foster Parents at Fostering People are classed as self employed and as such must register to play Class 2 National Insurance Contributions. However Class 2 contributions are only payable if you make a profit from fostering. Profit is classed as anything you receive from fostering which is eligible for tax (Not covered by the Qualifying Care Relief). Because the QCR threshold is generous, it means foster parents at Fostering People are not likely to exceed this and therefore are eligible for National Insurance Credits, which count towards your state pension and other benefits covered by National Insurance.

How much could I receive as a foster parent?

Visit our financial calculator to see how much fostering allowance you could receive. This will give you a guide as to your annual income.

Financial Calculator

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