Learn more about foster carer payments
Find out what the fostering allowance covers and how foster carer payments work alongside tax and benefits.
Financial considerations when fostering
As a foster carer:
- you can foster alongside employment
- you can provide ongoing care or respite care
- your foster carer payments are tax-exempt
- your foster carer payments won’t affect benefits
It's right to consider the financial implications of fostering. We are happy to answer any financial questions you may have.
Foster carers perform an essential role, so whilst money shouldn't be a primary motivation, it’s right that you are properly paid for the hard work and care you will provide.
Depending on the children needing care and your age preference, you might not foster continually for 12 months of the year, so you will need to account for this in your budgeting.
As part of initial discussions, we will talk to you about your financial circumstances.
The payment you will recieve
Fostering is not one size fits all, it’s very flexible. You can foster full-time or part-time as a respite carer and your payment will be calculated accordingly.
You will be paid as a Level 1 carer in your first year of fostering, whilst you complete some training courses and a workbook. After this, or if you are already a foster carer transferring to us, you will be paid as a Level 2 carer.
The allowance you receive for the child considers costs such as birthdays, uniform, religious festivals and their school prom. It also takes into account clothing, food, household bills, activities and pocket money.
The fostering allowance is also to cover transport and the everyday running around. Most of this ‘running around’ will be local. If you travel over and above that, you can claim mileage at a cost per mile.
How foster carer payments work alongside tax
Foster carers are considered self-employed and are subject to special tax rules. This means they can be exempt from paying tax on all or most of their fostering income, depending on certain factors.
Our team will talk to you about tax rules for foster carers and signpost you to more information.
The Fostering network has more information on:
How foster carer payments work alongside benefits
If you already claim benefits, whether this is Income Support, Working Tax Credit, Child Tax Credit, Housing Benefit, Income-based Jobseeker’s Allowance, or you’ve moved over to Universal Credit – any fostering payments will be disregarded as income.
If you claim Carers Allowance or DLA for your own child, fostering payments will also be disregarded as income.
Because fostering is classed as self-employment, you could still be entitled to working tax credit and child tax credit if you have children of your own.
Any new benefits claims would come under Universal Credit.
If you are a couple, then one person would be nominated as a “lead carer” and although fostering income is disregarded, other household incomes such as the partner’s income would have to be declared. You cannot receive Universal credit if your capital (savings and investments) is above £16,000.
Our team can advise you on your individual situation and help you understand what your financial situation will look like if you foster.