Fostering FAQs
Fostering can be an incredibly fulfilling opportunity, but we recognise that it’s a big decision to make.
There’s lots to consider, so we have some frequently asked questions here to help you with your decision making.
Whilst taking on the role of a foster carer should not be driven by financial incentive, we are realistic about the cost to individuals who embark on these professional roles. With this in mind, early in 2025, Orkney Islands Council agreed an enhanced packed of both financial and emotional support for our foster carers.
Do foster carers pay tax and national insurance?
Foster carers are treated as self-employed for tax purposes. There is a generous tax scheme foster carers can use called Qualifying Care Relief. The scheme calculates a tax threshold unique to the fostering household which, when compared with their total fostering payments for the same tax year, determines if a foster carer has to pay any tax from their fostering. The vast majority of foster carers do not pay tax from their fostering.
When a foster carer registers as self-employed, they also have to make provisions for Class 2 National Insurance Contributions. If a foster carer’s taxable profit (any amount over their tax threshold) from self-employment is nil or below £6,365 (2019-20) they are automatically exempt from paying Class 2 contributions (this is called the Small Profit Threshold (SPT)). The individual circumstances of the foster carer will determine if this is the best option for them or whether they have to make other arrangements to maintain their NI record, such as national insurance credits.
