Can kinship carers receive benefits alongside fostering allowances?

The key issue is not simply whether a kinship carer receives a fostering allowance, but how the carer’s legal status, the type of payment and the rules for the particular benefit fit together. A payment made to an approved kinship foster carer is often treated differently from wages or ordinary self-employed income, but this does not mean every benefit will continue unchanged.

Kinship carers should first establish which arrangement applies:

• Kinship foster care: the child is placed with an approved foster carer by a local authority or fostering agency, and the carer receives fostering payments.
• Special guardianship or another court order: the carer has parental responsibility under a different legal arrangement, and any allowance may be governed by separate rules.
• Informal kinship care: the child lives with a relative or friend without a formal fostering placement. There may be no fostering allowance, and benefit entitlement is assessed on a different basis.

This distinction matters because a fostering allowance is designed to contribute towards the costs of caring for a child. For several means-tested benefits, fostering payments are generally disregarded or treated under special rules rather than being assessed in the same way as employment income. The treatment must still be confirmed for the specific benefit and the exact payment received.

Universal Credit may be payable alongside fostering payments. In many cases, the fostering allowance is not counted as ordinary earnings when Universal Credit is assessed. However, the child placed through fostering will not normally be treated in exactly the same way as a birth child or a child for whom the claimant has parental responsibility when the child element is calculated. Universal Credit can also be affected by other income, savings, rent, household members and changes in circumstances.

If the household includes the carer’s own children, those children may be assessed separately under the normal Universal Credit rules. A kinship carer should therefore provide accurate information about every child in the household rather than assuming that the fostering allowance determines the whole award.

Child Benefit needs particular care. Child Benefit is not normally paid in respect of a child who is being fostered where the local authority or fostering agency is meeting the child’s maintenance through fostering payments. This does not necessarily affect Child Benefit for other children in the household. The position can differ where the child is living under a special guardianship order, a child arrangements order or an informal arrangement, so the carer should check the child’s legal status before making a claim.

Housing Benefit and Council Tax Reduction are administered according to specific rules and, in some circumstances, fostering payments are disregarded. The household’s rent, income, savings, council tax liability and the people included in the claim can still affect the outcome. A local authority may also need details of the placement when reviewing the claim, even where the fostering allowance itself is not counted as income.

Tax credits and other older benefits have their own treatment. Most new tax credit claims are no longer available, but a person with an existing award or another legacy benefit should not assume that the rules are identical to Universal Credit. The relevant department should be told about the fostering arrangement and asked how the allowance is recorded.

Other support may also be relevant, but it depends on the child and the carer rather than on the fostering allowance alone. For example, Disability Living Allowance for children is based on the child’s care or mobility needs. Carer’s Allowance has separate eligibility conditions, including the level of care provided and the claimant’s earnings. Receiving a fostering allowance does not automatically establish entitlement or rule it out, so both claims need to be checked independently.

Before claiming or renewing a benefit, prepare:

• the fostering approval or placement documents;
• the fostering allowance statement, including any separate fees or payments;
• details of the child’s legal status and the date the placement began;
• information about other children and adults in the household;
• income, savings, rent and council tax details requested by the benefit authority; and
• records of any payments that are intended for the child’s expenses.

When speaking to a benefit office, describe the payment accurately as a fostering allowance, kinship allowance, fee or expense payment, as appropriate. Do not combine different payments into one figure if they are listed separately in the fostering agreement. Ask for the decision in writing and keep copies of correspondence, because the classification of a payment can affect the calculation.

The fostering service can explain what each payment is intended to cover, while the relevant benefit authority must decide how it affects an individual claim. Report the start or end of a placement, a change in approval status, a change of address and any change in household income or savings. If a decision appears to treat a fostering allowance as ordinary earnings, ask for the calculation to be explained and consider requesting a mandatory reconsideration or other review route within the stated deadline.