What should a foster care agency explain about allowances?

Foster care allowances are regular payments made to help foster carers meet the costs of caring for a child or young person placed with them. A fostering agency should explain the payment structure in writing, including what is included, what is paid separately, and how the amount may change according to the child’s needs and the type of placement.

A clear allowance explanation should distinguish between the main allowance and any fostering fee. The allowance is generally intended to contribute towards everyday costs such as food, clothing, personal items, household bills, travel and activities. Some agencies also pay a separate fee to recognise the carer’s time, skills and responsibility. The agency should state whether its published figure combines these elements or shows them separately, so that the total is not misunderstood.

The agency should provide a written breakdown rather than relying on a single headline figure. This should set out:

• the basic payment for each placement type;
• whether rates differ for emergency, short-term, long-term, respite, parent-and-child or specialist placements;
• how payments are affected by the child’s age, assessed needs or level of support required;
• which costs are included in the standard allowance;
• which expenses can be claimed in addition, and what evidence or approval is needed;
• the date on which payments begin and end; and
• how and when the agency reviews its rates.

Ask the agency to explain whether payments are made for every day of a placement or through another arrangement. It should also clarify what happens when a child arrives or leaves part-way through a payment period, when a placement ends unexpectedly, or when a child is temporarily away from the foster home. These details can make a practical difference to household budgeting.

Additional expenses should be explained separately from the everyday allowance. Depending on the agency’s policy, these may include agreed travel, school-related items, equipment, activities, contact arrangements, damage caused by a placement or other exceptional costs. The agency should say whether such expenses are paid automatically, reimbursed after a claim, or require approval before the cost is incurred. Keep receipts and records where the policy requires them, and do not assume that an unusual expense will be covered without checking first.

Agencies should also explain how allowances relate to the child’s own money. For example, there may be guidance about pocket money, birthday gifts, clothing budgets, savings, or money needed for school trips and hobbies. This helps carers understand which decisions they make from the fostering payment and which must be recorded or managed under the child’s care plan.

Payment arrangements may change as the placement changes. A child’s needs can increase, a short-term placement can become long-term, or additional support can be agreed following a review. The agency should explain who authorises a change, when it takes effect, and whether it is temporary or ongoing. If a placement requires extra supervision, specialist equipment or significant travel, ask how the financial impact will be assessed and recorded.

Tax should be covered at a general level, but an agency should not present its explanation as personal tax advice. Foster carers may have specific tax rules and reliefs available to them, and the correct position can depend on their circumstances and the tax rules in force at the time. The agency should provide current guidance on record keeping and point carers towards an appropriate official or professional source when individual advice is needed.

It is also reasonable to ask how allowances affect other household finances. The agency should explain that foster care payments can interact with matters such as benefits, employment decisions or household budgeting, without assuming that the same answer applies to every carer. A prospective carer should check their own position before relying on an allowance figure when deciding whether fostering is financially workable.

Before applying, ask the agency these practical questions:

• What is the current payment structure, and which parts are allowance and which are fee?
• What costs must the main payment cover?
• Which expenses can be claimed separately?
• Are there different rates for different placement types or levels of need?
• What happens financially during respite, planned absences, unplanned endings or gaps between placements?
• How are rate changes communicated to foster carers?
• What records, receipts or prior approvals are required?
• Where can I obtain current tax guidance?

A suitable agency should give consistent answers and provide its payment policy for careful reading before approval. If the verbal explanation differs from the written agreement, ask for clarification before proceeding. Allowances are only one part of the decision to foster, but understanding them properly helps applicants assess the practical responsibilities and plan their household finances realistically.