What financial support is available for therapeutic foster care?

Financial support for therapeutic foster care usually consists of payments for the child’s day-to-day care, a professional fee for the foster carer where applicable, and reimbursement or funding for agreed placement-related costs. The exact amount depends on the fostering service, the child’s assessed needs, the type of placement and the carer’s responsibilities, so therapeutic fostering does not have one standard national payment rate.

The main forms of financial support are:

• Fostering allowance: This is intended to cover the ordinary costs of caring for a child, such as food, clothing, household expenses, travel, activities, school-related items and personal needs. The allowance is for the child’s care and should not be viewed as ordinary wages.
• Professional fee: Some services pay a separate fee to recognise the foster carer’s time, skills and professional responsibilities. Whether this is available, and how it is calculated, depends on the service and the placement.
• Enhanced or specialist payments: A child with significant emotional, behavioural, developmental or health needs may require a more intensive package of care. Where the placement is formally assessed as therapeutic or specialist, the payment may reflect the additional supervision, appointments, training, record-keeping and partnership work involved. An enhanced payment is not automatic simply because a placement is described as therapeutic.
• Agreed additional expenses: Some costs may be paid separately when they have been discussed and approved in advance. These can include specialist equipment, transport, activities, respite arrangements, clothing, education-related items or health needs.
• Benefits and other household support: Depending on household income, circumstances and the child’s legal arrangements, a foster carer may be able to claim or retain certain benefits. Benefit rules are complex and can change, so advice should be taken from the relevant government service or a qualified adviser rather than relying on a general assumption.

How payments are decided

Before approval, the fostering service should explain its payment framework and the difference between an allowance, a fee and reimbursed expenses. During matching, it should also discuss the child’s needs and the practical demands of the placement. This helps establish whether the proposed payment reflects factors such as appointments, therapeutic work, contact arrangements, transport, education support, safeguarding requirements and the level of supervision needed.

Payment arrangements can differ between a short-term placement, a long-term placement, respite care, emergency care and placements involving more than one child. The agreement should state when payments begin, how they are made, what happens during planned holidays or respite, and whether any payments change when a placement ends or a child is temporarily away from the fostering household.

Tax and benefit considerations

Foster carers may receive favourable tax treatment through the government’s fostering tax scheme, subject to the relevant rules. This does not mean every fostering payment is automatically tax-free, and the position can depend on the number of children cared for and the carer’s circumstances. Income from fostering may also interact with means-tested benefits. A fostering service can explain the general arrangement, but a tax adviser, benefits adviser or the appropriate government department should confirm individual circumstances.

It is sensible to keep clear records of payments and agreed expenses, including receipts where required. Records can help with tax returns, benefit reviews and discussions about costs that were not anticipated when the placement began.

Questions to ask before accepting a placement

• What part of the payment is the child’s allowance and what part is the foster carer’s fee?
• Is the payment rate different for therapeutic or specialist placements?
• Which costs are included in the allowance, and which can be claimed separately?
• Do approved expenses require prior agreement or receipts?
• How are transport, contact, activities, equipment, respite and professional appointments funded?
• What happens to payments during holidays, respite, hospital stays or unplanned absences?
• When are payments made, and how are changes to the placement reflected?
• Could the payments affect existing benefits or tax responsibilities?

Financial support should be considered alongside the practical commitment involved in therapeutic fostering. The payment structure needs to be clear enough for you to budget realistically without using the allowance to meet unrelated household costs. Before making an application or agreeing to a particular match, ask the fostering service for its current payment guidance and request a written explanation of the terms that would apply to your circumstances.