Foster carers and shared lives carers

Income tax and qualifying care relief (QCR)

Below, where we refer only to foster carers and shared lives carers, that should be read as including those other categories of carer mentioned in the introduction above, as appropriate.

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 National Insurance contributions. We have lots of information about how the tax system works for the self-employed in our self-employment section. 

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

Although foster carers and shared lives carers are self-employed, assuming you are giving qualifying care then you are exempt from any obligations under HMRC’s Making Tax Digital for income tax  rules if this is your only source of income. 

If you have other self-employment income and/or property income then you are exempt from Making Tax Digital for the 2026/27 tax year even if your gross income from your other self-employment and/or property income breaches the Making Tax Digital threshold for 2026/27 of £50,000. Therefore the earliest you would have to follow the Making Tax Digital rules would be from the 2027/28 tax year.

To find out whether your exemption is automatic and if it is not, how to claim the appropriate exemption see our Making Tax Digital exemptions page. 

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 qualifying care relief works see our Qualifying care relief page.

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.