fostering tax allowance

Fostering tax allowance

Do foster parents pay tax?

Foster parents are usually exempt from paying tax on their income from fostering due to a specialist tax rule known as 'qualifying care relief'.

From the moment you start caring for a child, you'll receive £18,140 annual tax relief allowance, plus an additional weekly allowance for each child in your care. The amount of weekly foster care relief that you receive depends on the age of the child you are caring for.

Since the government increased the tax relief rate for foster carers from April 2023, foster families will generally be able to keep the majority - if not all - of their fostering allowance payments.

foster carers tax allowance

How does foster care tax relief work?

Foster parents are classed as self-employed and will need to complete a tax return each year. However, many will either pay very little or no tax at all on their fostering income thanks to qualifying care relief.

The qualifying care relief comprises of two parts:

  1. Annual tax allowance - you can receive £18,140 in fostering income, per year, before you have to pay any tax.
  2. Weekly relief - a weekly tax relief amount for each child in your care:
    • £375 per week for children under 11
    • £450 per week for children aged 11 or over
tax and fostering

Things you may need to consider...

While foster parents pay little or no tax at all, there are some things that may affect this:

  1. The number of children you have in placement
  2. Whether you're paid enhanced fees for the children in your care
  3. Whether you operate as a partnership for tax purposes
  4. Whether you receive any other income - e.g. part-time job

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Becoming a foster parent shouldn't affect the benefits you're able to receive. That's because your income from fostering isn't counted towards your total income when calculating eligibility.

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