Consistently Outstanding since 2013

Tax and National Insurance

Tax relief and exemptions

Thanks to generous tax relief from HM Revenue & Customs, our foster parents pay very little, if any tax.

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 of up to £10,000 per year (or less if you foster for a shorter period). 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 £10,000 you earn from fostering.

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 £10,000 tax exemption meaning you won’t have to pay tax on some of your earnings over £10,000.

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 £200 each week.

For each child aged 11 or over in your care, you will benefit from a tax relief of £250 each week.

We have included some examples for you on this page, however in very simple terms, if you foster one child with Fostering People, you won't pay any tax.  If you foster two children for a year you will receive approximately £46,000 a year and pay approximately £200 in tax.  If you foster three children for a year, your allowance could be £66,000 and on this you'll pay approximately £2000 in tax.

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 £10,000

Tax exemption for 52 weeks at £250 £13,000

Susan's total fostering allowance £21,000

Total tax threshold for fostering £23,000

Susan receives a fostering allowance of £21,000 which is below the threshold of £23,000, so Susan will not be eligible to pay tax.

Example 2

Steve fosters a 12 year old for a full tax year, but then has a 6 year old alongside for 14 weeks.

Tax relief £10,000

Tax exemption for 52 weeks at £250 £13,000

Tax exemption for 14 weeks at £200 £2,800

Steve's total fostering allowance £28,000

Total tax threshold for fostering £25,800

Steve receives a fostering allowance of £28,000. £2,200 of his income is eligible for tax. Steve has no other income other than his fostering allowance, so he has not exceeded his personal tax allowance, which is currently £12,500.  So Steve will not pay any tax.

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.

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.

Finance Calculator

Tax - who can foster?

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