Foster carers and shared lives carers
This section of the website is specifically designed to help foster carers, shared lives carers (including adult placement carers), certain kinship carers and those offering staying put care, understand how tax and National Insurance (NIC) works.
After this we refer only to foster carers and shared lives carers but that should be read as including those other categories of carer, as appropriate.
It is important to understand that foster carers and shared lives carers are required to register with HMRC as self-employed unless they are being paid through a payroll as an employee with tax and National Insurance contributions being deducted by their employer (which is unusual).
There is a single, statutory income tax relief for all ‘qualifying care’. This includes foster care, adult placement care, kinship care, staying put care and parent/child arrangements. In order to be ‘qualifying care’ the child (or adult) needs to have been placed with the carer by a local authority or an authorised social care scheme. The definition of qualifying care is provided on the pages relating to foster care and shared lives care.
While the aim of ‘qualifying care relief’ is to reduce burdens in relation to tax, the way the rules work need to be understood.
In the following paragraphs we explain the various reliefs and claims which are available and which will help ensure you do not pay tax you are not liable for. We also take a look at tax credits.
This guide is split into the following pages: