Are agency fostering allowances paid directly to foster carers?

An agency fostering allowance is normally transferred to the approved foster carer rather than retained by the fostering agency. The agency administers the payment, but the allowance is intended to help the carer meet the everyday costs of caring for the child or young person placed with them.

The amount paid may be made up of different elements. These can include money for the child’s routine expenses, such as food, clothing, travel, personal items and activities, together with any fostering fee or professional payment that the agency provides for the carer’s role. The allowance and the fee should be explained separately so that you understand what each payment is intended to cover.

Payment arrangements vary between agencies. The allowance policy should explain:

• how often payments are made;
• whether payment is made by bank transfer or another method;
• when payments begin after a placement starts;
• how payments are handled for part-period placements;
• which expenses are included in the allowance and which can be claimed separately;
• whether payments change for respite, holidays, planned breaks or a child moving home; and
• what happens if a payment is queried or appears to be incorrect.

The fostering agreement should also clarify the financial arrangements for an individual placement. This is important because some costs depend on the child’s needs, the type of placement and the circumstances agreed with the agency. For example, specialist equipment, agreed travel or other exceptional expenses may be dealt with separately rather than being expected to come from the regular allowance.

Before accepting a placement, ask the agency to confirm the payment you should expect for that child, the date of the first payment and any additional expenses that have been authorised. Keep the written allowance policy, fostering agreement, payment statements and receipts for agreed costs. These records make it easier to check that payments match the agreed terms and to raise any discrepancy with the agency.

An allowance is not usually the same as a salary. It is linked to the costs and responsibilities of fostering, while any separate fee reflects the carer’s professional contribution where the agency’s scheme includes one. The way these amounts are treated for tax can depend on the relevant rules and the carer’s circumstances, so prospective foster carers should check the current position rather than rely on an old payment guide.

If you are comparing agencies, look beyond the headline allowance rate. A clear policy should show what is paid directly, what is reimbursed separately, how the payment is calculated and who to contact about financial questions. This gives you a more accurate picture of the support available than the allowance figure alone.