What It’s Really Like to Register as a Self-Employed Foster Parent

The word “self-employed” puts a lot of people off before they’ve even started. It sounds like paperwork, spreadsheets, and a tax return you’ll need an accountant to decode. For foster parent Cathy, that’s exactly what she expected too, until she actually went through it.

“I think it’s the unknown that makes people worry,” Cathy says. “You hear ‘self-employed’ and start wondering what you need to register for, what you can claim for, how you’ll do a tax return, whether you need to understand a lot about tax. It can sound much more complicated than it actually is.”

Every foster parent in the UK is classed as self-employed for tax purposes, whatever type of fostering they do. That means registering with HMRC, getting a Unique Taxpayer Reference (UTR) number, and completing a Self Assessment tax return each year. Fostering payments are covered by a scheme called Qualifying Care Relief, which sets a tax-free threshold most foster parents never go over. Knowing the rules on paper is one thing, though. Hearing what it’s actually like from someone who’s done it is another. We asked Cathy to talk us through her experience.

Was registering as self-employed easier or harder than you expected?

“Definitely easier. I think the phrase ‘self-employed’ makes it sound much bigger than it is. You might imagine you’re setting up a company and there’s going to be lots of complicated administration involved, but that isn’t what it’s like. Registering with HMRC itself is quite easy.

“I think a lot of foster parents get to the end of it and think, ‘Oh, was that it?’ It can feel intimidating before you’ve done it because it’s unfamiliar, but once you know the steps, it’s much less daunting.”

Once you’d actually registered, how did you find the process?

“It was really straightforward. Once I was approved, it was a case of registering with HMRC, getting my UTR number, and then completing a tax return each year, which you can do online. For me, fostering one child, it was essentially a case of giving them the figure for what I’d been paid through fostering. There really wasn’t much more to it.”

Did you need much knowledge about tax before you started?

“No, you don’t have to already be an expert in tax or anything like that. There’s support available to help you understand it. As a Compass foster parent, I could get advice through FosterTalk, including guidance on tax, and there are other foster parents who’ve been through exactly the same process and can talk you through their experience.”

Was there a part you expected to be difficult that turned out to be simple?

“The tax return itself can sound scary when you’ve never done one before. In my experience, especially when I was just fostering one child, it was much simpler than I imagined. It was really about providing the figure for my fostering and completing the return online.”

What would you say to a foster parent who’s worried about registering as self-employed?

“I’d tell them not to be put off by the words ‘self-employed’. It really isn’t as difficult as you might imagine. Registering with HMRC is quite straightforward, and you’re not expected to know everything yourself. There’s support available, and other foster parents have all been through that same point of wondering how it works. Once you understand the steps, it feels much more manageable.”

Support that goes beyond the paperwork

Cathy’s experience is a good reminder that no Compass foster parent works these things out alone. Every foster parent has a supervising social worker, plus access to FosterTalk for practical guidance on tax, benefits, and finances. There’s also a wider community of foster parents who’ve already sat where Cathy once sat, wondering how it all works.

If the phrase “self-employed” is what’s holding you back from fostering, take it from someone who’s been through it: the paperwork is far less complicated than it sounds, and you won’t be figuring it out on your own.