What financial support is available to foster carers?

Financial support for foster carers is made up of payments and practical help intended to meet the costs of caring for a child, with the exact arrangements set by the fostering service and influenced by the child’s needs, age and placement circumstances. Support may include a regular fostering allowance, a separate professional fee, additional payments for specific needs and reimbursement for approved expenses.

What a fostering allowance is intended to cover

The allowance is designed to contribute towards the day-to-day costs of looking after a child. Depending on the fostering service’s policy, this can include food, clothing, toiletries, household bills, travel, activities, school-related costs and personal items. It should be sufficient to help the child take part in ordinary family life, rather than being treated as a general payment with no connection to their care.

Some services provide additional amounts for items such as birthdays, religious or cultural celebrations, holidays, school uniform, equipment or travel. These arrangements differ, so ask for the current policy and find out which costs are included in the standard allowance and which need to be claimed separately.

Fees and enhanced payments

Some fostering services pay a fee in addition to the child-related allowance. A fee recognises the foster carer’s skills, time, training and responsibilities. It may vary according to the type of fostering, the carer’s experience, the child’s needs or the complexity of the placement.

There may also be enhanced payments for specialist placements, emergency arrangements, sibling groups or situations requiring particularly high levels of care. These are not automatic and should be explained before a placement is accepted. Ask whether a payment is an allowance, a fee, a reimbursement or a discretionary amount, as each may be treated differently.

Expenses and one-off costs

Foster carers should receive clear information about claiming approved expenses. Depending on the policy, support may be available for mileage, public transport, appointments, contact arrangements, training, activities and essential items for a child joining the household. Some costs may require prior approval, receipts or a claim submitted within a set period.

Before applying, ask how the service helps with initial costs such as bedroom equipment, clothing, safety items and other essentials. Also check what happens when a child’s needs change, when a placement ends or when an item needs replacing. Keeping receipts and maintaining a simple record of placement-related spending can make claims easier to manage.

Tax and benefits

Fostering payments have specific tax rules. Foster carers may be able to use qualifying care relief, which can reduce the amount of fostering income treated as taxable. The calculation depends on the carer’s circumstances and the relevant tax rules, so carers should keep accurate records and obtain current guidance from HM Revenue and Customs or a qualified tax adviser.

Fostering payments can also affect means-tested benefits or other household support. The effect depends on the benefit, household income, savings, number of children and other personal circumstances. Check with the relevant benefits service before relying on an assumed entitlement. A fostering service can explain the type of payment it makes, but it cannot replace personalised benefits or tax advice.

Questions to ask before applying or accepting a placement

• What is the current allowance for the type of fostering being considered?
• Is there a separate fee, and what factors can change its amount?
• Which costs are included, and which can be claimed as approved expenses?
• Are there additional payments for birthdays, holidays, equipment, travel or specialist needs?
• When are payments made, and what happens if a placement changes or ends part-way through a payment period?
• What records, receipts or approvals are needed for expense claims?
• How are payments treated for tax and benefits purposes?
• Is financial support available for essential items before a child arrives?

A written payment guide is useful because verbal explanations can leave uncertainty about conditions and exclusions. Prospective foster carers should review the figures and policy supplied by the fostering service, consider their own household budget and clarify any point before proceeding. Foster carers are generally expected to have a stable financial position, so fostering payments should not be viewed as a way to resolve existing financial difficulties or as guaranteed employment income.