Can foster carers claim Qualifying Care Relief if they have another job?

Having another job does not, by itself, prevent a foster carer from using Qualifying Care Relief (QCR). The relief applies to qualifying fostering receipts, while wages or salary from employment remain subject to the normal tax rules for that employment.

How the two sources of income are treated

Your employer will usually deal with employment income through PAYE. Fostering is generally treated separately as self-employed income, so the tax calculation for fostering does not simply combine your fostering payments with your salary and apply QCR to the total.

Where QCR is used, the relief is calculated against qualifying care receipts. It is made up of a fixed annual amount for the fostering household and an additional amount linked to the care provided. The available relief can depend on factors such as the number of children in placement and the length of time they are cared for. Any receipts above the applicable relief are considered when working out whether there is taxable fostering profit.

QCR does not reduce the tax due on your wages, increase your employment tax code or replace your personal tax allowance. Your salary continues to be assessed under the PAYE rules, and the fostering calculation is dealt with separately.

Employment considerations during assessment

Although having a job is possible, the fostering assessment will consider whether your working arrangements are compatible with the needs of a child. This can include:

• the hours and location of your employment;
• travel time and any regular changes to your work pattern;
• your ability to attend training, reviews, meetings and appointments;
• arrangements for school runs, childcare and day-to-day supervision; and
• how you would respond when a child needs additional support or your planned arrangements change.

The agency will also consider the availability of other adults in the household and whether the proposed care arrangements are safe, reliable and suitable. Approval is based on the overall circumstances of the household, not simply on whether one applicant is employed.

What may need to be reported

If your fostering receipts result in taxable profit after applying QCR, you may need to report that profit to HMRC through Self Assessment. Your employment income and tax deducted through PAYE are also included in the relevant tax return, but they remain identifiable as employment income rather than fostering receipts.

Even where QCR means that no tax is due on the fostering activity, a reporting obligation can still depend on your wider circumstances and HMRC’s requirements. Do not assume that having tax deducted from your salary automatically deals with your fostering income.

Keep fostering payment statements, placement dates, records of qualifying care and relevant expenditure separately from payslips and employment records. This makes it easier to apply the relief correctly and explain the calculation if HMRC asks for supporting information.

Before applying, consider whether your employment contract contains restrictions on additional work or requires you to notify your employer. You should also discuss your circumstances with the fostering service, particularly if your working pattern changes. For the tax position, HMRC or a suitably qualified tax adviser can confirm whether QCR or another method is appropriate and whether you need to complete a Self Assessment tax return.