What financial support is available for kinship foster carers?

Financial support for kinship foster carers depends on the child’s legal status, the public authority responsible for the placement and the carer’s own circumstances. An approved kinship foster carer should receive information about the applicable payment scheme before the placement begins, including what the allowance is intended to cover, which costs can be claimed separately and how payments are reviewed.

What the fostering allowance is intended to cover

The regular allowance is designed to contribute towards the costs of caring for the child rather than provide a wage. It may help with food, household bills, clothing, personal items, transport, activities and other ordinary costs of family life. The rate can be affected by factors such as the child’s age, needs, placement type and the policies of the local authority or fostering agency.

Some children need more support than others. A child may have health, educational, emotional or behavioural needs that create additional costs. Ask for a written explanation of how the payment has been calculated and whether enhanced or specialist rates apply. The fact that a child is related to you does not, by itself, determine the level of financial support.

Other payments and help that may be available

• Initial equipment or setting-up assistance: some authorities provide help with essential items needed for the placement, such as a bed, clothing, school equipment or safety items.
• Reimbursement of agreed expenses: travel for contact, appointments, meetings or activities may be covered where it has been authorised in advance. Keep receipts and check mileage and travel rules before incurring significant costs.
• Education, health or activity costs: funding may sometimes be available for particular needs, services, clubs, holidays or activities, but these arrangements vary and may require an assessment or prior approval.
• Emergency or exceptional support: a social worker may be able to consider one-off assistance where an unexpected cost is directly connected with the child’s care.

These forms of help are not automatic. The financial support plan should say whether an item is included in the regular allowance, paid separately or expected to be funded by the carer.

Benefits and household income

Fostering payments are subject to special rules in the benefits system, but the effect on a household depends on the benefit being claimed, the carer’s other income, savings, housing costs and family circumstances. Foster payments are commonly treated differently from ordinary employment income for means-tested benefits, although this does not mean that every benefit remains payable or that every part of a payment is disregarded.

For example, the rules affecting Universal Credit, Housing Benefit, Council Tax Support and help with childcare can differ. A looked-after child may also be treated differently from a child living with a parent when assessing child-related benefits. Do not assume that Child Benefit, a child element or another payment can be claimed simply because the child lives in your household. Check the position with the relevant benefit office or an independent welfare adviser before relying on an estimate.

Tax treatment

Approved foster carers may qualify for HMRC’s qualifying care relief, a tax arrangement that recognises the costs of providing foster care. It can include a tax-free allowance for qualifying care receipts, subject to the rules and limits that apply to the individual carer and their household. Foster carers are generally responsible for keeping suitable records and dealing with their own tax position rather than treating the allowance as ordinary salary.

Keep records of payments received, dates of placements, agreed expenses and relevant household costs. Tax rules can change, and the correct treatment may depend on whether the arrangement is approved fostering, a different kinship arrangement or another form of care. HMRC guidance or advice from a qualified tax adviser can help you establish what applies.

Why the legal arrangement matters

Financial support is not identical across all forms of kinship care. An approved foster placement is different from an informal family arrangement, a child arrangements order, a special guardianship order and adoption. Those arrangements can have different allowances, benefits, legal responsibilities and access to support. If a child leaves foster care for a different legal order, the payment may change, so ask for a written explanation before agreeing to a change in status.

Questions to ask before approval or placement

• Which organisation will pay the allowance and what rate applies to this child?
• What costs are included in the regular payment?
• Are there additional rates for disability, therapeutic needs, sibling groups or other assessed requirements?
• Which travel, contact, clothing, school and activity costs can be claimed separately?
• Is there a procedure for requesting equipment or exceptional financial help?
• When and how are payments reviewed, and what happens if the child’s needs change?
• How could the arrangement affect current benefits, tax and pension or National Insurance planning?

Request the fostering allowance policy and the child’s financial support plan in writing. The supervising social worker or fostering team can explain local procedures, but benefit and tax decisions should be checked with the relevant government service or an appropriately qualified adviser. This gives you a realistic picture of the ongoing costs and prevents important payments or reporting duties being overlooked.