What financial support is available to foster carers?

Financial support for foster carers is set by the fostering service and usually combines placement funding with guidance on tax, benefits and approved costs. There is no single national rate that applies to every fostering arrangement, so the written terms offered by the service are important when comparing your options.

What the main payment is intended to cover

The fostering allowance is designed to contribute towards the everyday costs of caring for a child or young person. Depending on the child’s circumstances and the service’s policy, this may include food, household bills, clothing, personal items, travel, activities and other ordinary costs of family life. It is intended to be used for the child’s care rather than treated as a general wage.

Some fostering services also offer a separate professional fee or skills payment for particular types of fostering, levels of experience or responsibilities. This is not automatic and may depend on the fostering scheme, the carer’s approval category, training, placement requirements or other conditions. Ask whether any payment is an allowance, a fee or a reimbursement, because these can be treated differently for tax and benefits purposes.

Expenses that may be paid separately

In addition to the regular allowance, a service may agree to cover specific placement-related expenses. Examples can include:

• travel connected with contact arrangements, meetings, education or appointments;
• activities, clubs or trips that form part of the child’s care plan;
• essential equipment or items needed because of the child’s age, health or additional needs;
• initial clothing or personal belongings where these are required;
• costs associated with holidays or other planned arrangements; and
• approved training, assessment or other care-related expenses.

Policies differ on what is included in the allowance and what must be agreed in advance. Keep receipts and records where required, and check the approval process before committing to a significant cost. A fostering service may not reimburse an expense that was not authorised or does not meet its policy.

How a child’s needs can affect support

Financial arrangements may vary according to factors such as the child’s age, the level of care required, sibling placements, health needs, therapeutic support, transport demands and the type of placement. A placement involving substantial appointments, contact travel or specialist equipment may need an individual discussion rather than relying only on the standard allowance.

During assessment, discuss how the service approaches situations where a child’s needs change. You should understand who makes decisions about additional funding, what evidence may be needed and whether approval is required before an expense is incurred.

Tax and benefits

Foster carers should receive clear information about how payments are treated for tax. Foster carers may be able to use the qualifying care relief rules, which provide specific tax treatment for approved foster care income. The calculation can depend on the household, the number of children cared for and the relevant tax year, so do not assume that every payment is tax-free or that the same position applies to every carer.

Fostering payments can also interact with benefits or other household income. The effect depends on the benefit, the household’s circumstances and the nature of the payment. Obtain current advice from HM Revenue and Customs, the relevant benefits service or a suitably qualified adviser before making financial decisions. A fostering service can explain its payment structure, but it cannot replace tailored tax or benefits advice.

Costs to plan for yourself

Although fostering support is intended to contribute towards the child’s care, carers may still need to budget for ordinary household commitments and costs that fall outside the service’s policy. Before applying, consider the impact of food, utilities, transport, activities, clothing, home space and any changes to your existing family routine.

You should also ask how payments operate when a placement has not yet started, when a child moves on, during planned breaks, or when a placement ends unexpectedly. The answer may depend on the fostering service’s terms and the circumstances of the placement. Do not base your household budget on an assumption that payments will continue in every situation.

Questions to ask before becoming approved

• What payment structure applies to the type of fostering I am considering?
• What does the standard allowance cover, and which costs can be claimed separately?
• Are there different arrangements for emergency, short-term, long-term, sibling or specialist placements?
• Which expenses need prior approval, and what records or receipts are required?
• Can payments change when a child’s needs or placement arrangements change?
• What happens financially when a placement ends or a child moves to another placement?
• What training and guidance is available on tax, benefits and household budgeting?
• Where can I find the current payment schedule and written policy?

These details should be explained during the assessment and approval process, then set out in the fostering service’s agreement and relevant policies. Read the documents carefully and raise any uncertainty before accepting a placement. A clear understanding of the financial arrangements helps you plan responsibly and focus on meeting the child’s needs.