Foster carers and shared lives carers

Income tax and qualifying care relief (QCR)

It is important to understand that if you are a foster carer or shared lives carer you are required to register with HMRC as self-employed unless you are being paid through a payroll as an employee with tax and National Insurance contributions (NIC) being deducted by your employer (which is unusual). So it is likely you will be self-employed for paying tax and NIC. We have lots of information about how the tax system works for the self-employed in our self-employment section.

However, although foster carers and shared lives carers are self-employed, if your only income is from qualifying care receipts then you are exempt from any obligations under HMRC’s Making Tax Digital for income tax  rules. If you have other income from another self-employment or from renting out property as well as qualifying care receipts, then you should ignore the qualifying care receipts when working out your qualifying income for Making Tax Digital purposes.

There is a single, statutory income tax relief for all called qualifying care relief (QCR). 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.

For the definition of qualifying care as it applies to foster carers see our page Qualifying care relief for foster carers.

For the definition of qualifying care as it applies to shared lives carers see our page Qualifying care relief for shared lives carers.

For details of how QCR works see our page Qualifying care relief.

Capital gains tax

For information on the capital gains tax implications of fostering or supporting a shared lives service user in your home when you decide to sell your house see our page Selling your home.