Fees and Allowances - Changing Futures Fostering

Fostering Fees and Allowances

  • What is our financial package worth? What fostering allowances do we offer?
  • Do foster parents pay tax on their income? How does tax & tax relief work when you’re a foster carer?
  • Can you claim benefits as a foster carer? Do you get a pension as a foster carer?

We pay you a generous allowance so that you have the money you need to care for your children. Some foster parents give up jobs to foster, and others go part-time, so making sure the money adds up is really important.

Our financial package is worth:

  • £445.78 per child per week placed aged under 11
  • £491.50 per child per week placed aged 11 or over

We paid an extra 10.25{24b5b3332ad20feb700fa35bb29d74d071f5f1c61397cfd53d8aa5d8c708b328} on our 22/23 rates to reflect the increased pressures foster parents experienced during the ongoing cost of living crisis.

The financial support is made up of the foster parent fee, the foster parent allowance and additional holiday payments. It breaks down to £445-491 per week per child placed (depending on the age of the child) when short break care and holiday payments are deducted. If you don’t use your short break care, you get this as a lump sum at the end of the year.

Fees and Allowances by Changing Futures Fostering

Other allowances include:

  • 18 days Short Break Care – From time to time, you may need a break, and we will work with you to support this. However, if you don’t use it, we will pay you the cash value for any outstanding.
  • Birthday and School Summer Holiday Payments – Amounting to £560 to £620 a year for every child placed with you.

Tax and foster care:

Foster parents don’t usually pay tax on their income. You do need to register as self-employed. You need to let them know as soon as you can to avoid paying any penalties.

You can claim Qualifying Care Relief, which is composed of:

  • A tax exemption of up to £18,140 per fostering household
  • A tax exemption for every week (or part of a week) that a child is in your care. In practice, this means that some of the earnings you have over £18,140 you won’t pay tax on. Tax relief is paid at the rate of £375 per child aged Under 11 or £450 per child aged 11 or over.

You may also be entitled to National Insurance Credits. These count towards your state pension.

Fees and Allowances by Changing Futures Fostering

What you might be paid after tax and tax relief:

Everyone’s circumstances are different. However, this is a bit of a guide as to what you might expect if you foster with Changing Futures North East.

 

Household tax exemption Weekly child exemption Total tax exemption An average of tax free monthly income
Sam is a foster carer for Lucy (14-year-old) for the whole of the year and for Ben (8-year-old for 10 weeks of the year). She does not have to pay tax on the first £45,290 she earns from fostering. £18,140 Lucy exemption

52 weeks x £450 = £23,400

 

Ben exemption

10 weeks x £375 = £3,750

£42,590

 

£3,774
George is a foster carer for Mathew (15) and Tom (14), both for 52 weeks a year. £18,140 Mathew exemption

52 weeks x £450 = £23,400

Tom exemption

52 weeks x £450 = £23,400

£64,940 £5,412
Mary is a foster carer for Gemma (10) for 52 weeks a year. £18,140 Mary exemption

52 weeks x £375 = £19,500

£37,640 £3,137

Benefits:

You might be able to claim some benefits if you foster, and fostering may affect some benefits you are already on.

You can get disability benefits for your foster child if they meet the relevant criteria, and you may be able to claim a carer allowance if your foster child gets personal independence payment or disability living allowance.

Universal credit does not count fostering as self-employment or work. It should not affect eligibility for universal credit. All fostering payments are disregarded as income. If you foster a child aged 1 to under 16, you are required to attend work-focused interviews but not to gain work. When the child becomes 16, you would be required to look for and be available for work. Your fostering allowance won’t affect universal credit or housing benefits. Jobseekers allowance is, however, affected. It won’t affect things like disability living allowance or carers allowance if you claim these for your own child. Not all advisors understand the special rules for foster parents, so it is worth talking to us and seeking advice from the fostering network and .gov if you encounter problems.

Pensions:

You will earn class 2 or 4 national insurance credits as a foster carer; these will count towards your state pension. If you want to claim these credits, you need to complete a form called ‘CF411A’ annually, with evidence to show you’re a foster parent.

You can claim state or private pensions and continue fostering. Many foster parents are of pensionable age.

For more information on fostering fees and allowances, feel free to contact us at Changing Futures Fostering.