Can fostering affect my entitlement to benefits?

Fostering does not automatically end your entitlement to benefits. In many cases, fostering allowances are treated differently from earnings or other household income when benefits are assessed. However, the result depends on the benefit you receive, the type of fostering payment, your household income and savings, your housing situation, and any changes in your circumstances.

How fostering allowances are usually treated

Fostering allowances are intended to help meet the costs of caring for a child or young person. They are not normally treated in the same way as a salary for means-tested benefit calculations. This means receiving a fostering allowance does not necessarily reduce benefits such as Universal Credit, Housing Benefit or Council Tax Reduction.

There are important distinctions between fostering payments and other money you receive. Employment income, self-employed income from another activity, private fostering payments, maintenance received from a former partner, savings and a partner’s earnings may be assessed under the ordinary rules for the benefit concerned. Do not assume that every payment connected with caring is disregarded.

Universal Credit

Universal Credit is assessed using your household circumstances, including earnings, capital, rent, children or other dependants in the household, and caring responsibilities. Fostering allowances are generally treated separately from ordinary earnings, but the way your claim is recorded can still matter. Tell Universal Credit that you are a foster carer and provide the information it asks for about your fostering payments.

A foster child is not automatically treated in the same way as a birth child or an adopted child when Universal Credit calculates child-related elements. The allowance paid for the placement is intended to contribute towards the child’s care and maintenance. Your work-related requirements may also be reviewed in light of your fostering responsibilities, particularly if you care for a child with significant needs or have other caring duties.

Housing Benefit and Council Tax Reduction

Housing Benefit and Council Tax Reduction are administered under separate rules, and Council Tax Reduction schemes can vary between local authorities. Fostering allowances may be disregarded, but the decision can also depend on your other income, capital, household members and the type of accommodation you occupy.

A foster child may be treated differently from an adult non-dependant or a member of your permanent household. If you receive help with rent or council tax, notify the relevant council that you have started fostering, ended a placement or had a change in the number of children placed with you. Ask for a written explanation if the calculation changes.

Benefits linked to children and caring

• Child Benefit and child-related payments: you cannot usually claim ordinary child-related benefits simply because a child is placed with you under a fostering arrangement. The rules are different for adoption, special guardianship and some other arrangements.
• Carer’s Allowance: fostering does not automatically mean that you qualify or disqualify. Eligibility depends on the person being cared for, the level of care provided and your own earnings and circumstances. A foster placement should be explained when you make a claim.
• Disability benefits: benefits such as Personal Independence Payment or Disability Living Allowance are based on the disabled person’s needs rather than fostering income. A foster child’s entitlement is assessed separately, and a payment for the child does not automatically become the foster carer’s income.
• Legacy benefits: Income Support, income-based Jobseeker’s Allowance, income-related Employment and Support Allowance and Tax Credits have specific rules. Some people remain on older benefits because of transitional arrangements, so do not rely on Universal Credit guidance if you are making a claim under a different system.

What can change your entitlement

The fostering allowance itself may not be the factor that changes your claim. A change in your wider circumstances can have a greater effect. Relevant changes include starting or leaving employment, a change in your partner’s earnings, receiving another type of payment, moving home, changes to savings, becoming responsible for another child, or a placement beginning or ending.

Your benefit may also be reviewed if the fostering organisation changes the way a payment is described or if you receive a fee in addition to the allowance. Keep a clear record of the amounts paid, the dates they cover and whether they are labelled as an allowance, fee, mileage payment or reimbursement of expenses.

Before you apply to foster

• List the benefits and financial support your household currently receives.
• Ask the fostering organisation for a written breakdown of its allowance and any separate fees or expenses.
• Contact the office or department that administers each benefit and explain that you are considering fostering, rather than assuming one department’s decision applies to another.
• Use a recognised benefits calculator as an initial estimate, then confirm the position with the relevant benefit office or a qualified welfare rights adviser.
• Check whether you must report becoming approved, accepting a placement, receiving a payment or ending a placement.

Keep evidence of every decision

Benefit rules can be applied differently depending on the details of a claim. Keep award notices, fostering payment statements, placement dates, expense records and correspondence with the Department for Work and Pensions, HM Revenue and Customs or your local council. If a decision appears to count a fostering allowance as ordinary income, ask for the calculation and request a mandatory reconsideration or appeal where appropriate. Time limits can apply, so take advice promptly.

The safest approach is to treat fostering and benefits as related but separate parts of your household finances. A fostering allowance may be disregarded for one benefit while another payment, income source or change in circumstances affects your entitlement. Confirm the position for each benefit before relying on an estimate.