If you're a foster carer, the short answer is reassuring: your fostering income is exempt from Making Tax Digital. HMRC excluded "qualifying care receipts" from the definition of income that counts towards MTD, specifically because of how Qualifying Care Relief already works. But the exemption has edges — especially if you also foster through an agency and privately let a property, or run a side business. Here's exactly where the line sits.
Making Tax Digital for Income Tax applies to "qualifying income" — broadly, gross receipts from self-employment and property. When the rules were finalised, HMRC confirmed at Autumn Statement 2023 that foster carers would be excluded, by removing "qualifying care receipts" from the definition of qualifying income itself. This isn't a discretionary exemption you apply for. it's built into how the threshold is calculated in the first place.
In practice this means fostering pay simply never enters the MTD calculation, in the same way that, say, ISA interest never enters it. It doesn't count towards the £50,000, £30,000 or £20,000 thresholds at any phase of the rollout, and it never will unless the legislation changes.
Qualifying Care Relief (QCR) is the mechanism that usually makes fostering income tax-free in the first place, and it's why MTD doesn't need to touch it. Each tax year, you get a fixed household amount plus a weekly amount per child or adult in your care. If your total fostering receipts are below this "qualifying amount", your taxable profit from fostering is nil.
| Element (2025/26) | Amount |
|---|---|
| Fixed household amount (full year) | £19,690 |
| Weekly amount, child under 11 | £415 per week |
| Weekly amount, child 11 or over | £495 per week |
| Weekly amount, adult (Shared Lives) | £495 per week |
The fixed amount is per household, not per carer — if two approved foster carers share a home, they split it. Any part of a week counts as a full week, so a placement that starts on a Thursday still earns a full week's allowance. These figures are set by legislation and increase annually with inflation, so always check the current tax year's rates before filing.
This is where most confusion happens. Fostering income itself is always excluded from MTD. but if you also run a self-employed business or let out a property in your own name, that separate income is assessed on its own merits.
Blanca's fostering income is never part of the calculation. Her bookkeeping income of £33,500 is what actually determines her MTD position — above the 2027/28 threshold of £30,000, so (subject to the 2026/27 transitional exemption) she'll need to comply from April 2027 based on her bookkeeping business alone.
Usually, yes. Even when your taxable fostering profit works out at nil, HMRC still expects you to register for Self Assessment as a foster carer and complete the self-employment pages, claiming Qualifying Care Relief there. Filing a return and owing tax are two different things — most carers file every year and pay nothing on their fostering income.
If you're newly approved and this is your first year fostering, you normally need to tell HMRC by 5 October following the end of the tax year in which you started. Registration gives you a Unique Taxpayer Reference (UTR). if you're already registered as self-employed for another reason, you don't need a second UTR, but your fostering activity still needs to be reported correctly on your return.
Yes, provided the arrangement is a formal one made through a local authority or registered fostering/care service. Kinship foster carers (sometimes called "family and friends" carers) who are approved as foster carers for a relative's child qualify for Qualifying Care Relief exactly like unrelated foster carers, so the same MTD exclusion applies. Shared Lives carers looking after adults through a registered Shared Lives scheme are covered too, using the adult weekly rate instead of the child rate.
What doesn't qualify: informal family arrangements outside any local authority or registered scheme, and private lodgers who aren't part of a recognised care placement. Those situations fall under different tax rules entirely and won't benefit from this exemption.
Software links are affiliate, help fund CheckMyMTD. Recommendations based on ease of use for self-employed income tracking.
Usually not. Qualifying Care Relief means most foster carers owe no tax on their fostering income because their qualifying amount (a fixed household sum plus a weekly amount per child) exceeds their actual fostering receipts. You still need to declare it on a Self Assessment return and claim the relief, even though the taxable profit is normally nil.
Not for your fostering income. Qualifying care receipts are excluded from the definition of qualifying income used to work out who must join MTD, so fostering pay never counts towards the threshold. If you have separate self-employment or rental income above the threshold, that income may bring you into MTD independently.
Your fostering income stays exempt either way. For the 2026/27 tax year specifically, HMRC has given foster carers with qualifying care relief shown on their 2024/25 return a blanket exemption covering their other income too. From 2027/28 your rental income is assessed on its own against the threshold in force that year, separately from your fostering income.
Foster care (local authority or independent fostering agency), kinship and connected persons foster care, Shared Lives adult placements, staying put arrangements, and most supported lodgings arranged through a care scheme. It does not cover private lodgers taken in outside a recognised care scheme.
Yes, where the arrangement is a formal fostering-for-friends-and-family or kinship foster placement made through a local authority or fostering service, it qualifies for Qualifying Care Relief in the same way as unrelated foster care, and therefore the same MTD exclusion applies. Informal family arrangements outside a care scheme do not qualify.