Finances


A foster carers first priority is the children and young people that they care for. However, we recognise that foster carers need to be paid generously so that they can care for children and young people to the best of their ability.


In order to recruit and retain quality professional foster carers, our payments and allowances are realistic in recognition of the roles involved in being a foster carer.


The amount that you receive will vary depending on the type of placement you have i.e. respite or long term care, the age of the child or young person, whether you have siblings or unrelated children or young people in placement, complex needs, or if you are providing a more specialised tier 2 or 3 placement which pays higher allowances.


Foster carers are treated as self-employed for tax purposes. There is a specific tax scheme foster carers can use called qualifying care relief. The scheme calculates a tax threshold unique to the fostering household which determines if a foster carer has to pay any tax from their fostering.


Anyone who is self-employed must register to pay Class 2 National Insurance Contributions. If a foster carer’s taxable profit from self-employment is nil or below £5,965 (2015-16) they automatically qualify for the Small Profit Threshold (SPT) and will be exempt from paying the contributions.


The individual circumstances of the foster carer will determine if this is the best option for them or whether they have to make other arrangements to maintain their national insurance record.


Foster carers are approved rather than employed by their fostering service, and this status has a particular effect on means-tested benefits. In the main, fostering payments when a child is placed with a foster carer are disregarded when calculating welfare benefits.


Alternatively, foster carers may be able to claim Working Tax Credit because fostering is regarded as ‘work’ by HMRC when they have a child in placement.


In addition, there are also generous tax allowances available to foster carers, irrespective of the agency or Local Authority they are approved with. Further details with regard to tax is provided to applicants, but can also be obtained from the  HM Revenue and Customs website.


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