---
title: How Do Carers Pay Tax in the UK? (2026/27 Tax Year Guide)
description: "If you provide care in the UK, your tax obligations depend entirely on whether you receive state benefits for caring for a relative, or whether you operate as a self-employed foster, kinship, or shared lives carer. The UK tax system…"
url: "https://www.accountingfirms.co.uk/knowledge-bank/how-do-carers-pay-tax-in-the-uk/"
updated: "2026-08-11"
category: Self Employed Tax
---

# How Do Carers Pay Tax in the UK? (2026/27 Tax Year Guide)

If you provide care in the UK, your tax obligations depend entirely on whether you receive state benefits for caring for a relative, or whether you operate as a self-employed foster, kinship, or shared lives carer. The UK tax system treats these two groups very differently.

For the 2026/27 tax year, the government has updated key thresholds, extended specific tax reliefs, and granted a crucial exemption from new digital reporting rules. Here is an exhaustive guide on how carers pay tax.

## Tax on Carer’s Allowance

Many individuals care for a disabled family member or friend and receive Carer's Allowance from the state.

Under section 661 of the Income Tax (Earnings and Pensions) Act 2003 (ITEPA 2003), Carer’s Allowance strictly qualifies as a taxable social security benefit.  The government taxes the full amount of the benefit accruing in the tax year, irrespective of when you actually receive the payment.

### The 2026/27 Limits and Allowances

For the 2026/27 tax year, the Carer's Allowance rate is £86.45 per week.  To claim this, your separate earnings (after allowable deductions) must not exceed the strict earnings limit of £204 per week.

However, just because Carer's Allowance is "taxable" does not mean you will actually pay tax on it. You only [pay income tax](https://www.accountingfirms.co.uk/blog/under-the-umbrella/) if your total combined income (including your Carer's Allowance, part-time wages, and pensions) exceeds your Personal Allowance.  For 2026/27, the government has frozen the Personal Allowance at £12,570.  If your total income stays below £12,570, your tax bill is £nil.

## Tax for Foster, Shared Lives, and Kinship Carers

If a local authority or fostering agency pays you to care for a child or adult in your own home, HMRC treats you as a self-employed earner.  To prevent you from having to track every single household expense, the government offers a generous statutory scheme called Qualifying Care Relief (QCR) under Chapter 2 of Part 7 of the Income Tax (Trading and Other Income) Act 2005 (ITTOIA 2005).

Under section 804 of ITTOIA 2005, you qualify for QCR if you receive qualifying care receipts from providing foster care, shared lives care, kinship care, or staying put care.

### The 2026/27 QCR Thresholds

QCR allows you to receive a specific "qualifying amount" of income completely tax-free. For the 2026/27 tax year, you calculate your tax-free allowance by combining two elements:

1. **The Fixed Amount:** Every caring household receives a fixed tax-free allowance of **£19,690** for the year.  If multiple carers live in the same house, you must share this fixed amount.
2. **The Weekly Amount:** You add a specific weekly amount for every week (or part-week) you care for someone:
   - **£415** per week for each child under 11 years old.
   - **£495** per week for each child aged 11 or older, or for each adult.

### How to Calculate Your Taxable Profit

If your total care receipts for the year fall below your calculated QCR threshold, HMRC treats your taxable profit as exactly £nil.

If your income exceeds the QCR threshold, you choose between two methods to calculate your tax:

- **The Simplified Method:** You simply deduct your QCR allowance from your total receipts and pay [income tax](https://www.accountingfirms.co.uk/blog/a-painful-profits-extraction/) on the difference.
- **The Profit Method:** You ignore QCR entirely, deduct your actual apportioned household expenses from your total receipts, and pay tax on the actual profit.

## National Insurance for Carers

Your [National Insurance Contributions](https://www.accountingfirms.co.uk/blog/are-tips-taxable/) (NICs) also depend on your carer status.

If you claim Carer’s Allowance, the government automatically credits you with Class 1 [National Insurance](https://www.accountingfirms.co.uk/blog/when-is-the-tax-return-deadline/) contributions.  This protects your future entitlement to the State Pension, even if your caring duties prevent you from working full-time.

If you operate as a self-employed foster or shared lives carer and your profits exceed the QCR threshold, you must pay Class 4 NICs. For the 2026/27 tax year, you pay **6%** on profits between £12,570 and £50,270, and **2%** on any profits above £50,270.  The government has abolished mandatory Class 2 NICs for profits above the threshold, but you may choose to make voluntary Class 2 payments of **£3.65 per week** if your profits fall below the threshold and you want to protect your pension record.

## The 2026/27 MTD for ITSA Exemption

From April 2026, the government introduces Making Tax Digital for Income Tax Self Assessment (MTD for ITSA), which forces self-employed individuals earning over £50,000 to keep digital records and file quarterly updates.

However, HMRC explicitly exempts individuals who receive qualifying care receipts from using MTD for ITSA during the 2026/27 [tax year](https://www.accountingfirms.co.uk/blog/mtd-for-income-tax-what-small-businesses-need-to-know/).  This means foster and shared lives carers can continue to file a single annual Self Assessment [tax return](https://www.accountingfirms.co.uk/knowledge-bank/what-should-i-do-if-ive-stopped-being-self-employed/) using the 'self-employment (short)' pages, avoiding the heavy administrative burden of quarterly digital reporting.

### Summary Table: Carer Tax Rates & Thresholds (2026/27)

| Care Type / Element | 2026/27 Rate or Threshold | Tax Treatment | Authority |
| --- | --- | --- | --- |
| **Carer's Allowance** | £86.45 per week | Taxable if total income > £12,570 | s 661 ITEPA 2003 |
| **CA Earnings Limit** | £204 per week | Max earnings allowed to claim CA | HMRC Guidance |
| **QCR Fixed Amount** | £19,690 per household | Tax-free allowance (shared if multiple carers) | HS236 |
| **QCR Weekly Amount** | £415 (<11) or £495 (11+/Adults) | Added to fixed amount for total tax-free threshold | HS236 |
| **Self-Employed NICs** | 6% (Main) / 2% (Additional) | Payable on profits exceeding QCR threshold | Gov.uk Rates |
| **MTD for ITSA** | Full Exemption for QCR | File one annual Self Assessment return only | HS236 |

 

*Next steps: Self-employed carers should proactively review their total receipts against the new £19,690 fixed allowance and weekly multipliers to confirm if their profits are reduced to nil, ensuring they correctly check the Qualifying Care Relief box on their 2026/27 Self Assessment return.*