Foster Care Payments

Guide to Fostering Children - Part Six

If you’re considering the idea of fostering a child, what about the small matter of foster care payments? It would be best if you had some idea of the pay and fostering allowances you will receive as a foster carer.
Foster Care Payments
You might feel awkward about mentioning foster care payments, but you needn’t! Fostering children is now regarded as a well-respected ‘job’. One you should get paid for – like any other.
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Fostering Payments and Allowances

When you care for foster children, you become part of a team. You get rewarded the same way other professionals are. After all, as a foster carer, you work at the centre of this vital service!
Payments and allowances can vary from one agency (or local authority) to another. There’s also a distinction between the foster care allowance and foster care pay.

Foster Care Allowance

Foster care allowances are to meet the cost of caring for the child. These can include anything directly used to pay for the child’s general needs – Things like food, clothing, equipment, toys, and hobbies.
These Minimum Weekly Allowance figures are for the tax year from 6 April 2020 to 5 April 2021. They’re updated every April.
AREA AGE 0-2 AGE 3-4 AGE 5-10 AGE 11-15 AGE 16-17
London
£152
£155
£174
£197
£231
South East
£146
£150
£166
£189
£222
Rest of the UK
£132
£135
£149
£170
£198

Foster Care Pay

Foster care pay is a fee you receive for all that you do as a foster carer. As with the allowance, foster care payment rates vary.
Different agencies have their unique ways of arriving at the amount paid. You receive these foster care payments for each child in your care.
Are you wondering if it’s possible to make a career out of fostering? The answer is ‘yes’. Depending on the extent of your commitment, there is a wide range of opportunities.
Carers with specialist training or relevant experience sometimes receive enhanced payments. Some children have special needs which put extra demands on the foster carer. According to which agency or local council you work with, this can also increase the amount of foster care pay you receive.

Do Foster Care Payments Affect Benefits?

Benefits are complex, and entitlements depend on a lot of factors. In general, benefit payments you qualify for are not affected by foster care payments. You also need to take into account that the criteria for some benefits can change.
The benefits system is currently changing. Universal Tax Credit is being introduced in stages and will replace six benefits:
If you’ve got a specific question about benefits, you should seek professional advice. Each person’s circumstances are different.

Tax and National Insurance

As a foster carer, you are classed as self-employed for tax purposes. That means you’re required to complete a tax return and make class two NI contributions.
Qualifying Care Relief allows foster carers to receive certain payments (qualifying amounts) tax-free. There’s a fixed tax exemption of up to £10,000 per year. On top of that, you also get tax relief for every week (or part week) that a child is in your care.
With qualifying care relief, you only need to keep simple records for your business. As a foster carer, your business is you – and you register it as ‘your name’.
Registering as self-employed and for class 2 National Insurance is straight forward. You can:
The easiest way is to register online. You’ll then be prompted to send in your tax return and automatically be registered for Class 2 National Insurance contributions.
HMRC provide some resources to help with Tax and National Insurance. This includes webinars, e-learning, emails and videos

Pensions

If you foster, you may be eligible for National Insurance Credits, which count towards your State Pension. These credits can help to fill gaps in your National Insurance record, to make sure you qualify for specific benefits including the State Pension.
You might want to explore the difference getting a private pension could make to your retirement. If you do, you should seek professional advice. The Pensions Advisory Service offers free and impartial guidance to people with workplace and personal pensions.
Everything here is just a brief outline of the various foster care payments and allowances. If you’ve got any other pressing questions, check our faqs.
Foster care Payments is part 6 of our 7-part Guide to Fostering Children. Part 7 looks at Questons about Fostering Children.
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