Foster carer finance and insurance

All carers for Action for Children Fostering who have a child living with them receive two elements of payment:

• an allowance for the costs of supporting a child, plus
• a fee for their work.

For short breaks carers, the arrangements are slightly different; your supervising social worker will clarify these with you.

Your Foster Carer Agreement will spell out the payment arrangements for your individual situation.

Allowances and fees can vary according to the age and needs of a child, and geographical variation between local governments. However, allowances must be at least at the minimum level set by government nationally.

The allowance for a child’s care includes elements such as clothing, food, heat and light, school books, uniform and other child-related costs. Also included in this allowance is weekly pocket money for the child. The amount of pocket money will be agreed with the local authority at the planning meeting when a child moves in with you and will be regularly reviewed. You will be required to record the weekly amount given and to open a bank account for the child in their name. In addition, you will be expected to set aside an agreed sum from the allowance in a savings account for the child, also in their name, for which records must also be kept. Your supervising social worker will regularly check with you that savings for the child in your care are on track.

Some fostering providers allocate parts of the allowance to specific grants (such as birthday presents) each year. Action for Children provides all elements of the allowance in a monthly payment, enabling carers to make flexible choices over the course of a year or month; you may therefore wish to budget specifically for birthdays, school trips etc.

Occasionally additional grants may be accessed to enable individual children to undertake specific activities. This may be linked to an education provider, or through voluntary trusts.

Some children may be eligible for certain benefits. Carers will be encouraged and supported to apply for these benefits on behalf of a child where eligible.

Children in foster care are not eligible for free school meals because the local authority is already paying an allowance to cover their food.

Children aged 16 and 17 in full time education who are looked after are eligible for a maintenance grant from their local authority to support the costs of attending college.

As Action for Children foster carers, you are counted as self employed, as required by HM Customs and Revenue (HMRC). You are required to invoice your local fostering service for each month, according to the template provided to you, and will be paid monthly by BACS to your bank account. Your team administrator will ensure you are supported with this process, and that you have received clear written information to support you.

As a foster carer, you must be registered as self-employed with HMRC. Your fostering income is taxable in principle, but only if it exceeds a generous tax-free foster carers’ allowance called Qualifying Care Relief. As a result of this unique relief scheme, many foster carers will not in practice pay tax. Details of how Qualifying Care Relief is calculated, and your responsibilities on tax, are available at hmrc.gov.uk. : Help and support for foster parents in England: Tax arrangements - GOV.UK You can also access help with understanding your tax position from the Fostering Network.

Please note: if you have other paid employment, the tax payable on this income is not covered in this summary and you should seek advice from HMRC and your accountant.

Foster carers are eligible for National Insurance credits which contribute to the state pension. For more information on how to apply for NI credits see [link to existing Foster Carer info on AFC external website.]

Fostering will not affect your eligibility to claim certain benefits; however, each situation is different and Action for Children cannot give financial advice or benefits advice. Please see Manage an existing benefit, payment or claim - GOV.UK for more information.

[England Fostering NMS 28]

All foster carers must have a household insurance policy and car insurance policy and these must be kept up to date. You must inform your insurer that you are fostering. There is a wide range of policies available, and although Action for Children is not permitted to provide you with financial advice you can read more about this from the Fostering Network. Foster Shield: Supporting you where it matters most

Action for Children also has public liability insurance which indemnifies its approved foster carers from legal liability arising from the care of a child. This is provided at no cost to the foster carer.