Are fostering allowances considered when assessing council tax exemption?

Fostering allowances do not normally determine whether a property qualifies for a statutory council tax exemption. Foster carers do not receive an automatic exemption simply because they receive fostering payments. However, the council may ask about those payments when considering a discretionary reduction or a council tax support application, and the treatment can depend on the council’s local rules.

Exemption and council tax support are different. A council tax exemption is usually linked to the property or the circumstances of the people living there. By contrast, a discretionary reduction under section 13A of the Local Government Finance Act 1992, or a council tax reduction scheme for people on a low income, may involve an assessment of household finances. This is where fostering allowances may become relevant.

There is no single national rule requiring every council to include or disregard fostering allowances in such an assessment. A council’s scheme may distinguish between the maintenance element of a fostering allowance and any fee or payment made for the carer’s work. It may also apply specific rules for foster carers. You should therefore ask the billing council how it treats:

• fostering allowances and maintenance payments;
• fees or professional payments paid to the foster carer;
• payments received for children who are currently placed;
• payments received when no child is placed; and
• other income or benefits included in the household assessment.

Fostering allowances are also treated separately for income tax purposes. A foster carer may benefit from specialist tax rules for foster care, but that does not automatically mean the payments will be ignored in a council tax assessment. Tax treatment and council tax treatment should not be assumed to be the same.

If you are applying for council tax support or a discretionary reduction, complete the council’s financial assessment accurately. Include the fostering payments requested on the form and explain their source. If the form does not make clear whether allowances should be declared, ask the council before submitting it rather than leaving them out. Keep payment statements, placement records and correspondence, as the council may need to verify the information.

The council will normally consider fostering payments alongside the wider circumstances set out in its policy. These may include the household’s other income, the people living in the property, the council tax account, and any existing discount or reduction. Approval as a foster carer does not by itself establish entitlement, and receiving an allowance does not by itself rule out every form of help.

Ask the council for its decision in writing, including the policy or calculation used. If the fostering allowance appears to have been counted incorrectly, request a review and provide evidence showing what each payment represents. A council tax bill should generally continue to be paid while a dispute is being considered unless the council confirms a different arrangement. In England, an unresolved council tax liability dispute may ultimately be considered by the Valuation Tribunal for England, subject to the relevant appeal rules.

The most reliable answer will come from the council that issues the bill, because it administers the relevant exemption, discretionary reduction or council tax support scheme. Fostering approval documents alone are unlikely to settle the question; the council may need both confirmation of your fostering status and details of the payments received.