Do you have to pay tax as a Foster Carer?

HMRC treats paid carers, which includes foster carers, as running their own business for tax purposes.  This means you may have to pay tax on money you receive. 

However, you can claim ‘Qualifying Care Relief’ (QCR), which could reduce the tax payable. 

You can use QCR  if you have children or adults placed with you by:

  • a local authority
  • health and social care trusts in Northern Ireland
  • a fostering service provider
  • a shared lives service provider

Qualifying care relief covers:

  • foster care
  • shared lives care
  • kinship care
  • staying put care – where a young person who was fostered continues to receive care after their 18th birthday
  • parent and child arrangements – where the parent is aged 18 or over and the child isn’t a ‘looked after child’
  • supported lodging schemes – unless the relationship is more similar to that of a landlord and tenant rather than that between family members

HMRC offer a factsheet, which explains QCR in more detail.

If you need help with completing a tax return, please give us a call on 01908 227055