Your finances when you’re a foster carer

Thursday 04 November 2021

One thing all our foster parents have in common is that, while they don’t go into fostering because of the money, they need to know they’re going to have financial stability.

Here’s a simple overview of fostering and finances. We’ve linked out to our detailed finances section and don’t forget you can get in touch to ask more.

“We love what we do and would never see ourselves doing anything different. However, my wife gave up a full time job as a teacher to be the main foster carer. Therefore, it was important to us to know we would receive a fostering allowance that would allow us to provide a stable environment for a child”

– Paul, foster carer

Finances and fostering – quick facts

  • Foster carers are paid a generous fostering allowance for each foster child, usually tax free.
  • The fostering allowance has two components – a professional fee and money to cover the child’s needs.
  • Most state benefits are not affected by the fostering allowance.
  • All foster carers need to register as self-employed and pay National Insurance Contributions.
  • Some carers might also be entitled to Working Tax Credit and other state benefits.
  • We pay Bridging Retainer Payments to qualifying carers between fostering placements.

“One good benefit we get from National Fostering Group is the Max Card. This gives us discounts on family days out, trips to theme parks and fun activities – it has saved us a fortune over the years!”

– Saima, foster carer

  • National Fostering Group pays a higher rate of fostering allowance than all local authorities.
  • Our foster carers get a range of money-saving perks and discounts.
  • We’re also committed to providing clarity around what foster carers get paid, self-employed status, tax returns and state benefits.
  • Our training and support are completely free of charge.

Foster carer pay – the fostering allowance

“With the fostering allowance, you can work your way up to different levels. The more training and experience you have, the more you see an increase in your weekly allowance”

– Lee, foster carer

Foster care pay is called the fostering allowance. The average our foster parents receive is in the region of £22,000 a year, which is usually tax-free.

The fostering allowance you receive has two components – your professional fee and money to cover the child’s needs. It is calculated according to the type of fostering you undertake, among other things.

How much is the fostering allowance?

Some types of foster care are in demand or more challenging than others, so the fostering allowance is higher in some cases. The same goes for foster carers who are experienced and trained in particular skills.

For example, an emergency fostering placement pays around £400 per week per child; fostering a child with complex or challenging behaviours can pay around £500 per week. See more about pay for different types of fostering on our dedicated page.

Being a self-employed foster carer

“I would say don’t look on fostering as a job, look on it as a lifestyle change. There are ups and downs, as there are with all parenting, and it can be daunting at the start. But you will grow into it and learn as you go and when the foster children begin to flourish, that is such a high”

– Andy, foster carer

If you’ve never worked for yourself before, becoming self-employed might sound challenging.

However, the administrative ‘burden’ on foster carers is very small. In other words, it’s not a complicated process – HM Revenue & Customs gives a lot of great guidance and we’re on hand to help, too.

All foster carers have to register as self-employed, submit self-assessment tax returns, and pay National Insurance Contributions (unless you haven’t earned anything or sometimes if you’re above pension age).

Tax and foster care

Most foster carers don’t have to pay tax thanks to Qualifying Care Relief, which means take-home pay is higher.

To see how easy it is to work out your tax liability for your self-assessment, see the three-step process on our tax page

Many of our foster carers do their self-assessment online and some use the traditional paper-based way.

Benefits, pensions and foster care

Also thanks to Qualifying Care Relief, receiving a fostering allowance doesn’t affect benefits you’re currently receiving. You can also apply for credits that count towards your state pension.

Financial stability

As we’ve said, we pay a more generous fostering allowance than local authorities. The last thing we want is for our foster carers to be concerned about their financial situation.

We also have Bridging Retainer Payments in place for our foster carers. This helps to provide additional financial stability between fostering placements.

“Our foster carers are inspiring. The carers I work with never shy away from any situation and their dedication and passion to support these children is admirable. It is vital I am there for our carers any time they need me, I will always be on the end of the phone or at their door, anything they need”

– Lynne, supervising social worker

Want to know more?

See more about foster carer finances in our dedicated web section. Or, if you have questions or you’re ready to chat more broadly about fostering, contact your local team using our form.