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This publication is available at https://www.gov.uk/government/publications/qualifying-care-relief-foster-carers-adult-placement-carers-kinship-carers-and-staying-put-carers-hs236-self-assessment-helpsheet/hs236-qualifying-care-relief-foster-carers-adult-placement-carers-kinship-carers-and-staying-put-carers-2019
Qualifying care relief allows carers who look after children or adults to receive certain payments (qualifying amounts) tax-free.
With qualifying care relief, you only need to keep simple records for your business.
Who can use qualifying care relief
You can use qualifying care relief if you have children or adults placed with you by:
- a local authority
- health and social care trusts in Northern Ireland
- a fostering service provider
- a shared lives service provider
Qualifying care relief covers:
- foster care
- shared lives care
- kinship care
- staying put care - where a young person who was fostered continues to receive care after their 18th birthday
- parent and child arrangements - where the parent is aged 18 or over and the child is not a ‘looked after child’
- supported lodging schemes - unless the relationship is more similar to that of a landlord and tenant rather than that between family members
Private arrangements with friends or relatives do not qualify for the relief.
Your local authority can tell you if you’re eligible for qualifying care relief or if a child in your care is a ‘looked after child’.
Providers of supported lodging schemes may choose to use the Rent a Room Scheme.
The qualifying amount
The qualifying amount is made up of 2 parts:
- a fixed amount of £10,000 for each household for a full year
- a weekly amount for each cared for child or adult
- £200 for children under 11
- £250 for children aged 11 or over
- £250 for each adult
The fixed amount
If there’s more than one carer in the same household, you share the fixed amount.
To work this out, you’ll need to divide the fixed amount by the number of carers in the household.
If you’re a carer for less than a year, you can only use a proportion of the £10,000 fixed amount.
To work this out, you’ll need to:
- count the number of days you’ve been an approved carer
- multiply the number of days by £10,000
- divide the total by 365 - the number of days in a year (or 366 if February has 29 days)
If there’s more than one carer, you’ll also need to divide by the number of carers in the household.
The weekly amount
If you care for a child or adult for less than a year, you need to work out the total number of the weekly payments you received.
When you’re counting the number of weeks, each week starts on a Monday and ends on a Sunday. A part-week is counted in full. So, if a child or adult is placed with you from Wednesday to the next Tuesday, it will count as 2 weeks.
How qualifying care relief works
To work out your qualifying amount each year, you need to keep records of all the payments you receive from:
- your local authority
- health and social care trusts in Northern Ireland
- your fostering service provider
- your shared lives service provider
If your total payments are less than the qualifying amount
HMRC will treat you as not making a profit or loss for the year, so you do not pay tax or Class 4 National Insurance on your caring income.
You should fill in a tax return and claim qualifying care relief on the ‘Self-employment (short)’ pages.
If you have other income, for example from employment or savings, you’ll have to pay tax in the normal way.
You cannot claim expenses or capital allowances if you use qualifying care relief. For more information on capital allowances, see Helpsheet 252 Capital allowances and balancing charges.
If your total payments are more than your qualifying amount
If your fees, salaries, reward payments and allowances are more than your qualifying amount, you have 2 ways to work out your tax:
- the simplified method - you pay tax on the difference between your qualifying care receipts and qualifying amount
- the profit method - you pay tax on your total care receipts less any expenses and capital allowances
If you have a loss from an earlier year, for example because you changed the date your care receipt accounts are prepared up to or stopped providing qualifying care, you can use the loss against your profits for the year.
The profit method
If your expenses and capital allowances are more than your qualifying amount, you might want to use the profit method. If you do, you’ll have to keep detailed records of your business income and outgoings.
You should fill in a tax return and include your receipts and expenses on the ‘Self-employment (full)’ pages. You cannot claim qualifying care relief.
The simplified method
If your total care receipts are more than your qualifying amount, you can use the simplified method. This means that you pay tax on your total receipts from caring, minus your qualifying amount.
You should fill in a tax return. You should claim qualifying care relief, and include your total receipts and your qualifying amount, on the ‘Self-employment (short)’ pages.
Your accounting date
Qualifying care relief applies on a tax year basis – that is, from 6 April in one year to 5 April the next.
If your annual accounting date is not 5 April, HMRC will treat your total receipts from qualifying care and the qualifying amount as though they are for the tax year in which your accounting year ends.
For example, if your accounting year goes from 1 October 2017 to 30 September 2018 use the figures from your accounting year on your tax return for the tax year 2018 to 2029.
How to complete your tax return
For guidance on completing your return if you are claiming qualifying care relief please see page 2, Self Assessment: Self-employment (short) (SA103S)
For more information on how to complete your self-assessment tax return, look in the guidance notes.
For the full self-assessment return, see:
- Self Assessment: Tax Return (SA100)
- Self Assessment: Self-employment (full) (SA103F) guidance at box 2 (description of your business) explains how to complete your tax return depending on whether you’re using the simplified method or the profit method
For the short self-assessment return, see Self Assessment: Short Tax Return notes (SA211 and SA210).
Online forms, phone numbers and addresses for advice on Self Assessment.