Do foster carers pay tax on fostering income?

Most foster carers pay no tax on their fostering income thanks to Qualifying Care Relief (QCR). This provides a tax-free threshold of £18,140 per year plus £375 per week for each child under 11 and £450 per week for each child aged 11+. The vast majority of foster carers' income falls within these thresholds. If your fostering income exceeds the threshold, you only pay tax on the excess.

Does fostering income affect my Universal Credit?

Fostering income is treated as self-employment income for UC purposes, but the tax-free element under Qualifying Care Relief is not counted as earnings. Only the profit above the QCR threshold (if any) counts as income for UC. Most foster carers have no countable income. However, fostering allowances from the local authority are assessed as income.

How much do foster carers get paid?

Foster carers receive a fostering allowance from their local authority or fostering agency. The government sets minimum rates: from £157/week (child under 2, outside London) to £234/week (child 16-17, outside London). London rates are higher. Many agencies pay significantly above the minimum. This covers the child's costs and includes a fee element for the carer.

Can foster carers claim Child Benefit for foster children?

Generally no. Foster carers cannot claim Child Benefit for children placed with them by the local authority, as the child is officially 'looked after' by the council. However, if a child moves into a kinship or private fostering arrangement (not through the local authority), Child Benefit may be claimable. Check with HMRC for your specific situation.

Benefits & Support

Benefits for Foster Carers — Financial Support and Tax Rules

Guide to benefits and financial support for foster carers in the UK in 2026. Covers fostering allowances, tax relief, how fostering income affects UC and other benefits, and the qualifying care relief.

By PocketWise · 8 April 2026 · 3 min read

Benefits information is based on current DWP and HMRC rules. Entitlements depend on your personal circumstances. For free personalised help, contact Citizens Advice or call the Universal Credit helpline on 0800 328 5644.

Foster carers receive financial support through a combination of fostering allowances and generous tax relief. Here’s how the financial side of fostering works.

Fostering Allowances

Minimum Weekly Rates (England, Outside London) 2026-27

Child’s Age	Minimum Weekly Allowance
Under 2	£157
2-4	£160
5-10	£177
11-15	£202
16-17	£234

London Rates

London rates are approximately 15-20% higher than the national minimum.

Agency vs Local Authority

Feature	Local Authority	Independent Fostering Agency (IFA)
Rates	Usually at or near minimum	Often significantly higher
Fee element	May or may not include a fee	Usually includes a professional fee
Support	Social worker and training	Often more intensive support
Retainer	Sometimes, between placements	More commonly offered

Tax Relief: Qualifying Care Relief (QCR)

How It Works

Foster carers benefit from a generous tax exemption:

Component	Annual Amount
Fixed threshold	£18,140/year
Per child under 11	£375/week (£19,500/year)
Per child 11+	£450/week (£23,400/year)

Examples

Foster carer with one child aged 8:

Tax-free threshold: £18,140 + (£375 × 52) = £18,140 + £19,500 = £37,640
If fostering income is £25,000/year → Tax-free (below the threshold)

Foster carer with two children (aged 5 and 13):

Tax-free threshold: £18,140 + (£375 × 52) + (£450 × 52) = £18,140 + £19,500 + £23,400 = £61,040
Fostering income would need to exceed £61,040 before any tax is due

Most foster carers pay zero tax on their fostering income.

Registering as Self-Employed

Foster carers must:

Register with HMRC as self-employed
Complete a self-assessment tax return each year
Report fostering income and claim QCR
Pay Class 2 NI contributions (unless exempted by low profits)

Benefits Interaction

Universal Credit

Income Type	How UC Treats It
Fostering allowance	Assessed as self-employment income
QCR tax-free element	Not counted as earnings
Profit above QCR threshold	Counted as UC earnings
Most foster carers	No countable income for UC purposes

Other Benefits

Benefit	Affected by Fostering Income?
Housing Benefit	Fostering income assessed (with QCR deduction)
Council Tax Reduction	Fostering income assessed (with QCR deduction)
Child Benefit (own children)	Not affected
Child Benefit (foster child)	Cannot claim for local authority foster children
Free school meals	Based on your qualifying benefit status

National Insurance

Situation	NI Contribution
Fostering profit below Small Profits Threshold	No Class 2 NI required (but can pay voluntarily)
Fostering profit above Small Profits Threshold	Class 2 NI (£3.45/week)
Class 4 NI	Only on profits above £12,570 (rare for foster carers)
NI credits	If receiving Child Benefit for own children, or through UC

Benefits You Can Claim

For Yourself

Benefit	Availability
Universal Credit	If you qualify (fostering income mostly disregarded)
Housing Benefit	If not on UC
Council Tax Reduction	Based on income assessment
PIP	If you have a disability
Carer’s Allowance	For caring for someone other than the foster child

For Your Own Children

Benefit	Availability
Child Benefit	Yes — for your own children
UC child element	Yes — for your own children
Free childcare	Based on qualifying criteria
Free school meals	Based on qualifying benefit

For Foster Children

Support	Available?
Local authority fostering allowance	Yes
Child Benefit	No (for LA foster children)
UC child element	No (child is ’looked after’ by LA)
Free school meals	Yes — through the school (funded by LA)
Pupil Premium	School receives Pupil Premium Plus

Bedroom Entitlement

For UC Housing Element / Housing Benefit

Household Member	Bedroom Allowance
You (and partner)	1 bedroom
Your own children (under 10, same sex)	Can share
Your own children (10-15, same sex)	Can share
Foster child	1 extra bedroom allowed (up to 1)
Approved foster carer (no current placement)	1 extra bedroom allowed for up to 52 weeks

The spare room for foster children means the bedroom tax does not apply to the room kept for foster placements.

Training and Development

Support	Detail
Mandatory training	Provided and paid for by your fostering service
Additional training	Often funded by your service
Training fees	Tax-deductible if you pay them yourself
The Fostering Network	Professional body with resources and support
Local authority support groups	Peer support from other foster carers