Do foster carers pay tax?

Do foster carers pay tax? The simple answer is yes, foster carers do pay tax, just like anyone else. When you choose to become a foster parent, it’s fair to say that tax probably isn’t at the top of your list of concerns. However, understanding how tax works when you foster is important, as there are specific rules and generous allowances designed to support foster families. Knowing the ins and outs of the system can help you feel more confident and ensure you're making the most of the financial support available.

 

Becoming a foster carer is a life-changing decision, but many people wonder about the financial side of fostering. Fostering in Wales payment structures ensure that carers receive the support they need to provide a stable home. With a professional fostering fee and a fostering allowance in Wales, carers are financially assisted to cover the costs of caring for a child, but many also ask, do foster carers pay tax? The good news is that most benefit from the foster carer tax allowance, which often means little or no tax is due on fostering income. We’ll explore that, as well as answering the common question: how much do foster parents get paid? Understanding fostering in Wales pay can help you see how fostering is both a rewarding and sustainable role. If you're also interested in learning about foster pay in England, you can find more details on our England fostering page.

How does the Fostering Allowance Work in Wales?

Fostering allowance in Wales is designed to help carers provide a stable, nurturing home. It covers essentials like food, clothing, travel, leisure activities, and pocket money,ensuring children have a positive experience in care.

The amount carers receive depends on the child’s age, needs, and placement type. Those supporting children with more complex needs may receive higher payments. Allowances are paid fortnightly and include extra funds for birthdays, holidays, and clothing.

 

Some agencies also offer additional support. At Family Fostering Partners, for example, our ‘Be There to Care’ scheme provides a weekly payment for up to 10 weeks before a carer’s first placement, helping ease the financial transition. Pay is just one of many benefits fostering can bring. Pay is just one of the many benefits to fostering. 

How Much are Foster Carers Paid?

While money isn’t the main reason people foster, it’s still an important part of the decision. In Wales, fostering is recognised as a professional role, and the fostering allowance reflects this. Carers deserve fair financial support that matches the level of care and complexity involved. Payments are designed to cover essential costs and acknowledge the vital work foster carers do.

Are Foster Care Payments Taxable?

Foster care payments are technically taxable, but thanks to a generous scheme known as the foster carer tax allowance, or Qualifying Care Relief, most foster carers pay little or no tax on their fostering income. When you become a foster carer, you're classed as self-employed and must register with HMRC and complete a Self Assessment tax return each year. However, the tax system recognises the unique nature of fostering and provides a simplified way to calculate your tax, which works in most carers' favour.

The foster carer tax allowance is made up of two parts: a fixed annual amount (currently £19,690 per household) and a weekly amount for each child in your care. For example, in the 2025–26 tax year, that weekly amount is £415 for a child under 11 and £495 for a child aged 11 or over. If your total fostering income is below the threshold created by these allowances, you won’t pay any tax at all on it. Even if you do go over, you’ll only pay tax on the difference. This system is designed to support carers financially, making fostering a sustainable role while keeping tax obligations straightforward and manageable.

Calculations Behind Foster Care Tax Allowance 

How you calculate the tax you owe from your fostering income can be broken down into three easy steps:

1. Add up Annual Income from Fostering

This figure should include:

• Weekly fostering allowance
• Mileage
• Holidays
• Respite care
• Clothing
• Any other costs incurred for the care given (keep your receipts!)

Once all these figures have been factored in, the final figure is called your 'total income'.

1. Figure Out Your Fostering Relief Tax

You can bring home £19,690 per household per year, tax-free. You then receive an additional weekly allowance per child, variable by age.

Here's an example:

A foster parent looks after one child aged 14 and one aged 7 for a full tax year.

52 weeks x £415 (child under 11) = £21,580

52 weeks x £495 (child 11 and over) = 25,740

Plus £19,690

TOTAL FOSTERING TAX RELIEF = £67,010

This means that a foster parent looking after 1 child under the age of 11 and 1 child over the age of 11 will not pay any tax on the first £67,010 of their income.

Don't forget: any child that stays with you, even for a short amount of time, still counts towards your foster tax relief amount, so keep a note of any short stays.

1. Totalling Your Taxable Income

This is the easiest step!

£ total income from fostering (step 1)

minus

£ total fostering tax relief (step 2)

equals

Your £ total taxable income

Any figure totalling more than your fostering tax relief will have to have tax paid on it at the current rate. Therefore, to answer the question "Do foster carers pay tax?" you need to calculate the exact amount of income you receive through fostering, and see whether what you’ve earned is above the taxable income threshold.

Ready to Take the Next Step in Your Fostering Journey?

Understanding how tax and fostering pay work together is a key part of feeling prepared and confident in your fostering journey. While the question “do foster carers pay tax?” may seem complicated at first, the reality is far more supportive than most expect. With the foster carer tax allowance in place and a well-structured payment system across Wales, fostering can be both emotionally and financially sustainable. These systems are designed to recognise your commitment, reward your care, and remove unnecessary financial barriers from the start.

If you're ready to take the next step or want to explore how fostering could work for your family, we're here to help. You can learn more about how to become a foster parent and get in touch with Family Fostering Partners directly, whether you have questions about fostering pay, tax, or what to expect on your journey, we’re here to support you every step of the way.

Foster Carer Tax Allowance FAQ

What is the tax allowance for foster carers?

The qualifying care relief (often referred to as the foster carer tax allowance) for the 2025–26 tax year includes:

• A fixed amount per household: £19,690 fostereast.org.uk+8fosterline.info+8ispfostering.org.uk+8

• A weekly allowance per child:
  • £415/week for children under 11

  • £495/week for children aged 11 and over

How much can a foster carer earn before paying taxes?

A foster carer can earn up to a set threshold before paying tax, thanks to something called the foster carer tax allowance (also known as Qualifying Care Relief). For the 2025–26 tax year, this includes a fixed allowance of £19,690 per household, plus £415 per week for each child under 11 or £495 per week for each child aged 11 and over. As long as your total fostering income stays within this combined amount, you won’t pay any tax. You’ll only pay tax on anything you earn above this threshold.

Am I self-employed if I am a foster carer?

Yes, as a foster carer you are classed as self-employed for tax purposes. This means you need to register with HMRC and complete a Self Assessment tax return each year, even if you don’t end up owing any tax thanks to the foster carer tax allowance.