Do foster carers need to register for Self Assessment?

Self Assessment registration is separate from receiving fostering payments. The key issue is whether you have a reason to submit a tax return, such as taxable income after applying Qualifying Care Relief, other self-employed income, or another source of income that must be reported to HMRC.

When fostering income may not require registration

Qualifying Care Relief is a special tax arrangement for foster carers. It provides a tax-free amount calculated by reference to the household’s fostering receipts and the number of children or young people placed. If the relief covers the relevant fostering income, there may be no taxable fostering profit to report.

Where fostering is your only reason for considering Self Assessment and the relief leaves no taxable profit, you will not normally need to register solely because you foster. This does not remove the need to keep suitable records or to check whether HMRC has asked you to submit a return.

Situations where registration may be needed

• Your fostering income creates a taxable profit after Qualifying Care Relief has been applied.
• You have self-employed income from another activity that needs to be declared.
• You have other taxable income or a tax position that HMRC requires you to report through Self Assessment.
• HMRC sends you a notice to file a tax return.
• You were already registered and have not formally ceased Self Assessment, meaning HMRC may continue to expect returns until your registration is dealt with correctly.

Fostering payments can include allowances, fees and other amounts connected with caring for a child or young person. Their tax treatment should be considered together with your other income rather than assessed in isolation. For example, a household may have no taxable fostering profit but still need to complete a return because of another source of income.

How to register if you need to file

Registration is completed with HMRC for Self Assessment. You will need to provide personal details and information about the income or circumstances that require a return. HMRC will issue a Unique Taxpayer Reference, commonly called a UTR. You then use this reference when completing your tax return and dealing with HMRC.

If you become liable to register because of income arising in a tax year, the usual notification deadline is 5 October following the end of that tax year. The tax year runs from 6 April to the following 5 April. Do not wait until the filing deadline if you already know that registration is required, as late notification or late filing can lead to penalties.

What happens after registration

Once registered, you generally need to complete a tax return for each year in which HMRC requires one. The return should include the relevant fostering receipts, allowable expenses where appropriate, Qualifying Care Relief and any other income or reliefs that apply. Qualifying Care Relief is not automatically the same as a general exemption, so the figures still need to be calculated and entered correctly when a return is required.

If your circumstances change, for example because fostering stops or your income changes, you should tell HMRC if this affects whether future returns are needed. Simply having no tax to pay does not always mean that a return can be ignored if HMRC has issued a notice to file. You must submit it or contact HMRC to ask whether the notice can be withdrawn.

Records to keep

Keep records of fostering payments, placement dates, the number of children cared for, relevant expenses and any calculations used to apply Qualifying Care Relief. You should also retain details of other income and tax already deducted. These records support your return if one is required and help demonstrate how you reached the taxable amount, even where the relief reduces it to nil.

HMRC’s rules can depend on the type of payment, your wider income and whether you have another reason to file. If you are unsure whether you need to register, check your position directly with HMRC or speak to a tax adviser before the registration deadline.