Fostering tax allowance

Step 1: Work out your total income from fostering

Work out the annual income that you receive from fostering. This should include your fostering allowance, as well as any additional payments you have received, such as holiday payments, mileage claims, respite payments and more.

Examples:

Jodie cares for 1 child (aged 7): £443.80 x 52 = £23,077.60

Raifa cares for 2 children (aged 11 and 14): £926.56 x 52 = £48,181.22

Step 2: Calculate your total foster care tax relief

Every fostering household receives £18,140 of tax relief each year, plus a set weekly amount depending on the age of the children in your care – see amounts here.

Examples:

Jodie cares for 1 child (aged 7) and will receive £41,270 in tax relief: £19,690 + (£415 x 52)

Raifa cares for 2 children (aged 11 and 14) and will receive £71,170 in tax relief: £19,690 + ((£495 x 52) + (£495 X 52))

Step 3: Find out how much tax you will pay

The final step is to subtract your fostering tax relief (step 2) from your total income from fostering (step 1).

Taxable income = fostering income – tax relief

Examples:

Jodie cares for 1 child (aged 7) and receives £23,077.60 per year. Her total tax relief is £41,270 and so she will pay no tax.

Raifa cares for 2 children (aged 11 and 14) and receives £48,181.22 per year. Her total annual tax relief is £71,170 and so she will pay no tax.