All foster carers receive fostering pay when a child or young person is placed with them.
The average payment per week with an Independent (private) Fostering Agency would be between £350-£450 per placement.
Carers can expect to receive around £20,000 per annum in fees and allowances for looking after a single child and up to £57,000 for three children. These fees are only payable when a child/ children are in placement and as a foster carer you will need to register as Self Employed.
What does the Fostering Pay / Fees cover?
- The fees cover the additional costs that would be incurred from having another child living in your family home. These fees relate only to the fostered child and will cease once the child leaves your care; for this reason you must demonstrate that you can manage your daily expenses without relying on these fees.
- Another child/ young person in the house will mean a larger weekly shopping bill; foster carer payments will ensure this is covered for the length of the placement. Payments also cover the cost of clothing as we all know how quickly children grow and fashions change!
- An extra person in the house will mean an increase in utility bills. Foster carer payments ensure you are able to cover these additional costs without worry.
- Foster carers may need to travel on a more frequent basis; to attend meetings or training, support a child on visits to their own families or perhaps drive them to school. Your foster carer payment will take this into account.
- Most agencies provide additional allowances to cover birthdays, Christmas and any holidays.
Tax and benefits
In April 2003, the Government introduced an income tax exemption for foster carers with an income below a set level. Allowances for looking after foster children are not generally taxable. However, foster carers who have multiple placements and who also work may be liable to pay some tax if their income is above the set level.
For the purposes of calculating tax, Her Majesty’s Revenue and Customs (HMRC) treat foster carers as self-employed. HMRC produce helpful guidance for Foster Carers which you can request direct from HMRC
As a foster carer fostering children you will not be able to claim Child Tax Credit or Child Benefit for a foster child if you are in receipt of a fostering allowance. However you may be able to claim Working Tax Credit if you are receiving the reward element and you are treated as self employed. If you are putting in a claim for this, seek professional advice first.
Foster carers may be in a position to claim any of the following benefits, according to circumstances:
- Income Support
- Income-Based Jobseeker’s Allowance
- Housing Benefit
- Council Tax Benefit
- Disability Living Allowance
- Working Tax Credits