How are short-term fostering allowances calculated?

Short-term fostering allowances are worked out from the fostering service’s payment framework, with the amount adjusted where appropriate for the child’s age, assessed needs and the arrangements of the placement. The allowance is intended to contribute towards the costs of caring for the child, while a separate fee may recognise the foster carer’s skills, time and responsibilities.

The payment may be made up of several elements rather than one single rate. These can include:

• A maintenance allowance for everyday costs such as food, clothing, household use, personal items and ordinary activities.
• A fostering fee , where the service’s structure includes one, for the work involved in providing foster care.
• Additional agreed payments where a child’s circumstances create costs beyond ordinary day-to-day care.

The maintenance element is usually considered in relation to the child’s age because everyday costs can differ as children grow. The child’s individual needs are also relevant. For example, a placement involving particular equipment, specialist activities, travel or other identified expenses may require separate consideration under the fostering service’s policy. These payments should be agreed through the appropriate process rather than assumed by the foster carer.

The type of short-term placement can also affect how payments are handled. A planned respite arrangement, an emergency placement and a placement expected to continue while longer-term plans are made may involve different practical requirements. The length of the placement can affect the total amount paid and how the payment is calculated for part-periods, such as when a child arrives or leaves during a payment period.

Allowances are not normally intended to operate as an unrestricted salary. They are provided in connection with the child’s care and should be used to meet the costs of providing a suitable standard of care. Foster carers should keep a clear record of payments and relevant care-related expenses, particularly where the fostering service has issued guidance about budgeting, receipts or expenses that can be claimed separately.

Before accepting a placement, ask for a written breakdown covering:

• the maintenance amount and any fee included;
• how the child’s age and assessed needs affect the calculation;
• whether expenses such as travel, equipment, activities or clothing are included or paid separately;
• how payments are treated when a placement starts or ends part-way through a payment period;
• what happens if the child’s needs change during the placement;
• how payments are recorded and when they are made; and
• who to contact if an expected payment or expense reimbursement is unclear.

It is also important to distinguish fostering payments from other household income when considering personal finances. Tax treatment can depend on the fostering arrangement and the foster carer’s circumstances, and special rules may apply to qualifying foster care. The relevant fostering service and HM Revenue & Customs guidance can help explain the rules, while independent financial advice may be appropriate for more complex circumstances.

Because payment structures can change, the written information supplied by the fostering service should be treated as the source of the applicable calculation for a particular placement. If the proposed allowance does not clearly explain what it covers, raise the question with the supervising social worker or finance team before agreeing to the placement.