Foster parents are classed as self-employed and must return a complete self-assessment tax return each year. There may be a requirement to pay some tax, and every person’s situation is unique. However HMRC offers special tax relief (known as Qualifying Care Relief), which means that most foster parents pay no tax at all.
If you’re fostering one child for a year, you could receive:
Personal tax relief of £18,140
You’ll also receive a weekly tax allowance depending on the age of the child in your care:
£378 per week for children under 11
£450 per week for children over 11