Do foster parents receive an allowance?

A fostering allowance is a regular payment made to approved foster carers to contribute towards the costs of looking after a child or young person. It is generally intended to cover everyday expenses and recognise the practical responsibilities involved in fostering, rather than functioning as a standard salary.

What the allowance is intended to cover

The payment may contribute towards food, clothing, toiletries, household costs, travel, school-related items, activities and other expenses connected with the child’s care. Foster carers may also need to meet costs linked to appointments, family contact, transport or specialist equipment, depending on the placement arrangements.

The child’s age, the type of placement, the level of care required and the foster carer’s experience or approval level can all affect the payment structure. Some fostering services separate the maintenance element from a fee for the carer’s time, skills and responsibility. Others use a different arrangement, so it is important to ask how the figures are calculated rather than assuming every fostering service pays in the same way.

Is a fostering allowance a wage?

Usually, the allowance should not be viewed in the same way as employment income. Its primary purpose is to help meet the costs of caring for a child. Whether a separate professional fee is included, and how the income is treated for tax purposes, depends on the fostering service and the carer’s circumstances.

Foster carers should also understand that an allowance is not intended to be a source of profit. Keeping the child’s needs at the centre of spending decisions is part of the financial responsibility of fostering. Good records can help carers track placement-related expenditure and identify questions for their supervising social worker or fostering service.

Tax and benefits considerations

Fostering income is subject to specific tax rules. Foster carers may be able to use HMRC’s qualifying care relief, which provides a tax framework for income received from approved fostering. The treatment can depend on the number of children cared for, the length of placements and the carer’s wider financial circumstances. It should not be assumed that every payment is automatically tax-free.

Allowances can also affect a household’s wider financial position, including the assessment of certain benefits or other income-related support. Anyone receiving benefits, working elsewhere or running a business should obtain up-to-date advice from HMRC, the relevant benefits office or a suitably qualified adviser. A fostering service can explain the general arrangements but cannot replace personalised financial advice.

What happens when a placement changes?

Payments may change when a child moves in or out, when a short-term placement becomes longer term, or when the agreed level of care changes. There may also be separate arrangements for periods when a room is being held for a child between placements, although this is not universal. The written terms provided by the fostering service should set out when payments begin, how they are made and what happens at the end of a placement.

Additional expenses are not always included in the standard allowance. Before accepting a placement, ask whether costs such as travel, holidays, school uniforms, equipment, activities, appointments and contact arrangements are paid separately, require prior approval or must come from the regular payment.

Questions to ask before applying or accepting a placement

• What elements make up the fostering payment?
• Is there a separate fee in addition to the maintenance allowance?
• How does the payment vary according to the child’s age, needs or placement type?
• Which expenses are included, and which can be claimed separately?
• When are payments made and what happens if a placement ends unexpectedly?
• Are there arrangements for keeping a fostering bedroom available between placements?
• What financial records should foster carers keep?
• Where can carers obtain current tax and benefits guidance?

These details should be discussed during the enquiry, assessment and training stages, before a carer agrees to take a placement. The financial side is one part of deciding whether fostering is suitable; applicants also need to consider the space, time, household routines, training and emotional commitment involved in providing consistent care.

Become A Foster Family can explain the payment arrangements that apply through its fostering process, along with the training, supervision and ongoing support available to approved carers. Enquiries can be made by people across the West Midlands, including Birmingham, Worcestershire, Staffordshire, Dudley, Sandwell, Herefordshire, Telford, Wolverhampton, Shropshire, Walsall, Warwickshire, Stoke, Solihull, Coventry and Gloucestershire.