What is the difference between a fostering allowance and a fee?

The practical difference is what each part of the payment is intended to recognise: the fostering allowance contributes towards the day-to-day costs of looking after a child, whereas the fostering fee recognises the foster carer’s work, time, skills and responsibilities. Some fostering services list these as two distinct amounts; others present one combined payment.

What the fostering allowance is for

An allowance is designed to help meet the costs associated with caring for a child in placement. Depending on the fostering service’s policy, this may contribute towards food, clothing, personal items, travel, activities, school-related costs and the general household expenses that arise when a child joins the family. It is not normally treated as disposable income or a wage. Its purpose is to help ensure that the child has the practical things they need and can take part in ordinary family life.

The amount can vary according to factors such as the child’s age, the type of placement and the child’s individual needs. Additional arrangements may apply where a placement involves particular equipment, travel or support. The fostering service should explain which costs are included in the allowance and which may be reimbursed separately.

What the fostering fee is for

A fee is intended to recognise the foster carer’s contribution. Fostering involves more than providing accommodation: carers use their judgement, attend meetings, work with professionals, keep records, support contact arrangements and respond to the child’s changing needs. The fee may therefore reflect the level of responsibility, experience or specialist skills required for a particular placement.

A fee is not necessarily the same as a salary or an employment wage. The contractual relationship between a carer and a fostering service is different from ordinary employment, and the payment structure and tax position should be explained before an application is completed. Foster carers should obtain individual tax advice if they are unsure how their payments interact with their circumstances.

How the two amounts may appear

• Separate payments: the allowance and fee are shown as different lines, making it clearer which amount is intended for the child’s costs and which recognises the carer’s role.
• A combined fostering payment: the service gives one overall figure, with the allowance and fee included within it.
• Placement-specific arrangements: the payment may change where the placement type, level of care or child’s needs require a different arrangement.

A combined figure does not mean that the whole amount should be viewed as earnings. The fostering service should provide a written breakdown or explanation of the different elements and any conditions attached to them.

What to check before agreeing to foster

Ask the fostering service to explain:

• the current allowance and fee structure;
• which costs the allowance is expected to cover;
• whether particular expenses can be claimed separately;
• how payments are affected by the child’s age, needs or placement type;
• when payments begin and end under the fostering agreement;
• whether any payment is available during gaps between placements; and
• what payment records and annual statements will be provided.

It is also important to ask how payments are handled if a placement changes unexpectedly, if a child is away from the fostering household, or if a short-term or respite arrangement is agreed. These details can differ between fostering services and should not be assumed from figures quoted by another organisation.

In simple terms, the allowance relates primarily to the child’s maintenance and care costs, while the fee relates primarily to the carer’s professional contribution. Reading the payment schedule alongside the fostering agreement will show whether the figures are separate or combined and what each element is expected to cover.