What financial support does a connected person foster carer receive?

Financial support for a connected person foster carer is usually provided through fostering payments rather than a salary. The purpose of these payments is to contribute towards caring for the child, while other help may be agreed where the child has particular needs or the placement creates additional costs.

What the fostering allowance is intended to cover

The allowance is normally used for the child’s day-to-day needs, such as food, clothing, personal items, household costs, activities and travel connected with their care. It may also contribute towards costs such as celebrations, school requirements and pocket money, depending on the arrangements set by the fostering service.

The amount and payment arrangements are set by the responsible local authority or fostering service. They can take account of the child’s age, needs, care plan and the type of approval you hold. Ask for a written explanation of the current allowance, what it is expected to cover and whether different rates apply in particular circumstances.

Extra payments and one-off costs

Some costs are dealt with separately from the regular allowance. Depending on the child’s assessed needs and the local policy, this might include essential equipment, school uniform, travel to contact arrangements, specialist activities, adaptations or other agreed expenses. Not every cost is automatically reimbursed, so obtain agreement before committing to a significant expense and keep receipts where requested.

There may also be specific arrangements for costs associated with starting a placement. For example, a carer may need furniture, bedding, clothing or safety equipment at short notice. The social worker should explain what can be provided, what can be claimed and whether prior approval is required.

How fostering payments can affect benefits

Fostering payments can be treated differently from ordinary employment income when benefits are assessed, but the effect depends on the benefit, the household’s circumstances and the rules in force at the time. Your household income, savings, housing situation, existing children and any other caring responsibilities may also be relevant.

Do not assume that receiving a fostering allowance will have no effect on your benefits. Before accepting a placement, ask the fostering service for information and obtain independent advice from an appropriate benefits adviser or the relevant government service. Report changes when required, particularly if your caring arrangements, household income or benefit claim changes.

Child Benefit and other payments connected with children can have separate rules. A foster child is not treated in exactly the same way as a birth or adopted child for every benefit, so check how the specific payment applies to your circumstances. Existing claims for other children should also be reviewed rather than cancelled or changed without advice.

Tax treatment

Foster carers may benefit from HMRC’s qualifying care relief, which provides a special tax calculation for approved foster care. This can include a fixed tax-free amount for the care provided and additional tax relief linked to the child’s placement, subject to the rules and thresholds applying at the time.

Connected person carers should keep clear records of fostering income, dates of placements and eligible expenses, even where they expect little or no tax to be due. Ask HMRC or a qualified tax adviser to confirm how the rules apply to you. Tax treatment can be affected by other self-employed income, employment, shared caring arrangements or changes to the household.

Fostering allowance is different from other legal arrangements

Financial support can change if the child’s legal status changes. A child arrangement order, special guardianship order or adoption arrangement may involve different support schemes and responsibilities from fostering. The allowance paid while you are an approved connected person foster carer should not be assumed to continue unchanged after a new order is made.

Before agreeing to a change in legal status, ask for a written financial assessment. This should explain the proposed payment, whether it is regular or one-off, how it will be reviewed and what conditions apply. It is sensible to take independent legal and financial advice before making a decision that changes your legal responsibility for the child.

Questions to ask your fostering service

• What is the current allowance for this child and what expenses is it intended to cover?
• When will payments begin, and what happens if approval or placement arrangements change?
• Which additional costs can be agreed separately?
• Do I need permission before buying equipment, arranging travel or paying for activities?
• How will the payments be reviewed if the child’s needs become more complex?
• Could the payments affect my benefits, tax position or other household income?
• Who can provide written confirmation of the financial arrangements?

The safest approach is to assess the whole household budget before the placement begins, keep fostering payments separate in your records and ask for advice whenever the child’s needs or legal arrangements change. A social worker or supervising professional can explain the fostering service’s policy, but benefits and tax decisions should be checked with the relevant specialist adviser.