What financial support is available to foster carers?

Financial support for foster carers usually consists of a fostering allowance for the child’s day-to-day needs, with possible additional payments or reimbursements depending on the fostering service, the placement and the child’s circumstances. It is important to understand what each payment is intended to cover, how it is calculated and when it is paid before you agree to a placement.

The main types of financial support may include:

• Fostering allowance: This is intended to contribute towards everyday costs such as food, clothing, personal items, household expenses, travel and activities. The amount may reflect the child’s age, the type of placement and the fostering service’s payment structure.
• Additional placement payments: Some placements attract extra support because they involve particular responsibilities. This may apply to sibling groups, children with more complex needs, parent-and-child placements, emergency arrangements or specialist types of fostering. These payments are not automatic, so ask the service how its policies work.
• Fees or professional payments: Some fostering services pay an additional fee to recognise the carer’s time, skills and commitment. Whether this is available, and how it is assessed, depends on the service and the type of fostering undertaken.
• Expenses and agreed costs: There may be arrangements for travel, activities, essential equipment, approved contact arrangements or other costs directly connected with a child’s care. The service should explain which costs require prior approval and what records or receipts are needed.
• Practical start-up support: During assessment and preparation, ask whether the service provides or contributes towards items such as bedroom equipment, safety items or initial clothing. Arrangements vary, and you should not assume that every purchase will be reimbursed.

A fostering allowance is not normally the same as a salary. It is primarily provided to help meet the costs of caring for a child, although some fostering services may also offer a separate fee. The payment structure should be explained clearly during the assessment process, including whether payments are made per child, per placement or according to another arrangement.

What affects the amount you receive? Factors can include the child’s age, the number of children placed, the complexity of their needs, the placement type and the level of experience or approval held by the foster carer. A short-break placement may be paid differently from a full-time placement, while a specialist placement may have different requirements and payment arrangements. Rates and policies can change, so request the current fostering allowance guide rather than relying on figures found elsewhere.

Payments may also be affected by what happens during a placement. For example, ask how the service deals with holidays, planned respite, changes in a child’s circumstances, unplanned endings and periods when a bedroom is available but no child is placed. These policies are often described in the fostering service’s payment handbook or in the agreement provided before approval.

Tax and benefits

Foster carers should consider the tax position before applying. Foster carers are generally treated as self-employed for tax purposes and may be able to use a special tax arrangement known as qualifying care relief. This can reduce the amount of fostering income on which tax is calculated, subject to the rules that apply to the individual carer and their household. The rules can change, particularly where there are other sources of income, so obtain current guidance from HM Revenue & Customs, an accountant or an appropriately qualified adviser.

Fostering payments can also interact with benefits or other financial arrangements in different ways. Do not assume that an allowance will be treated as ordinary employment income, or that it will have no effect on your circumstances. If you receive benefits, are considering claiming them or have a household member whose entitlement may be affected, check with the relevant benefits service before making financial decisions.

Questions to ask a fostering service

• What is the current allowance for the types of placements I am considering?
• Is there a separate fee, and what conditions apply to receiving it?
• Which costs are included in the allowance and which can be claimed separately?
• Are there enhanced payments for specific needs, sibling groups or specialist placements?
• What equipment is provided at the start, and what must the foster carer purchase?
• How are travel, activities, contact arrangements and other approved expenses handled?
• When are payments made, and what happens if a placement changes or ends unexpectedly?
• What records, receipts or approvals are required?

Before approval, prepare a realistic household budget based on your existing income and regular outgoings. Fostering payments should be used to support the child’s care, so they should not be treated as guaranteed disposable income. A clear written payment guide, together with professional advice on tax and benefits, will help you understand the financial commitment and make an informed decision about fostering.