Foster carers and prospective foster carers sometimes say they feel uncomfortable asking about money. But we’d like to reassure you that it’s fine to ask about pay and allowances – in fact, it is very important.
Foster carers will pay very little or no tax at all on their fostering allowance thanks to Qualifying Care Relief.
This means you don’t need to pay tax on the first £10,000 your household makes in any year.
You also receive additional tax relief of up to £250 a week for every child in your care.
As a foster carer, you will be self employed and will only be paid our foster care allowance when you have a child or young person in your care.
If you foster with National Fostering Group, you may be eligible for Bridging Retainer Payments to fill the gaps in between fostering placements for extra peace of mind.
When you become a foster carer, you will need to register as self-employed, complete self-assessment tax returns to declare taxable income once a year and pay National Insurance.
As a self-employed foster carer, you are eligible to claim most state benefits, thanks to Qualifying Tax Relief.
You will still be entitled to claim child benefit for your own children and other children that are dependent on you. Exclusions will apply to the children that you are now fostering as you are already receiving the fostering allowance for each child or young person in your care.
Your fostering allowance is not classed as income when calculating your eligibility for means-tested benefits.
Some of our foster carers give up their jobs to care for children, so the foster care pay they receive is vital to support them and their household. And, while money is not the main motivation for people to become foster carers, nevertheless our foster carers perform a really important role, so it’s right that they are properly remunerated.
If you’re considering going into paid foster care, this section will explain about pay, allowances, tax, National Insurance, state benefits and pensions.
We want you to feel financially secure when you’re a foster carer with us, so you can focus your attention on providing great care and enjoying a good quality of life. That’s why foster care pay from National Fostering Group is far higher than the government’s recommended weekly allowance.
We want you to have peace of mind. We recognise that foster caring can sometimes be stressful. It’s important not to have money worries so you can care for the children in the way you’d like to and also look after your own wellbeing.
Here are some important things to remember about foster carer payments:
When I became self-employed, I was worried I’d have to save every single receipt and pay an accountant to file a complicated tax return every year. But it’s not like that at all. You don’t have to keep receipts and it’s easy to submit your tax return yourself.
The fostering allowance you receive has two components – your professional fee and money to cover the child’s needs.
Your professional fee recognises your skills, training and experience as a foster carer. It is the payment we make to you for providing first class care with the National Fostering Group.
It’s important the fostering allowance also covers the foster child’s physical needs, including food, clothing, travel, activities, savings and so on. We provide clear guidance on how best to spend this money so the child is supported to have a healthy, happy and balanced life.
This is why there is no single, fixed fostering allowance. It differs because foster carers have different skills and experience. The amount you receive also depends on the type of care provided (for example, if a foster child has complex needs), the child’s age, and whether you are fostering in London and the South East or the rest of the UK.
You don’t have to pay self-employed National Insurance Contributions if you’re a foster carer of retirement age. I mistakenly paid them for two years before I realised!
Once approved, you’ll receive foster care pay (known as a fostering allowance) in the region of £24,500 a year. For almost all foster carers, this will be tax free, making it the salary-equivalent of a £30,000 role before tax. Foster care pay doesn’t affect state benefits. However, it’s difficult to estimate an exact figure you’ll get paid for fostering. You might earn more than £24,500 or you might earn less.
In general, foster carers’ pay isn’t subject to Income Tax. For tax purposes, foster carers are regarded as self-employed. If this is all new to you, don’t worry – as a foster carer, your self-assessment tax returns are straightforward. We will offer you all the support you need.
All foster carers in the UK must register as self-employed and pay National Insurance Contributions. You do not have to pay National Insurance after you reach State Pension age unless you’re self-employed and paying Class 4 contributions. Don’t worry if you haven’t been self-employed before, as a foster carer it’s very simple and we offer you all the support you need.
We do all we can to provide you with the financial security of a regular income between placements. This is in the form of a weekly Bridging Retainer Payment, plus another payment made at the start of your next placement.
Your fostering allowance won’t affect most state benefit payments. Because fostering counts as self-employment, so you may be entitled to Working Tax Credit and also Child Tax Credit.
Exactly how much foster parents get paid in the UK depends on factors including the age and needs of the foster child, skills and experience, and the number of children fostered. On average, foster parents get paid in the region of £24,500 a year for fostering. This makes the monthly pay for the average foster parent around £2,040, tax free.
‘Allowances for foster carers’ usually refers to the fostering allowance. This is the money paid to a foster parent for fostering a child or children. It’s also known as foster carer pay, foster care payments, foster carers allowance and foster allowance. The fostering allowance has two components – a professional fee and money to cover the child’s needs.
‘Allowances for foster parents’ might be used by some people to refer to other things: the perks and benefits we offer our foster carers, like high street discounts; the fact that foster carer pay doesn’t affect state benefits or pensions; and also that fostering tax benefits mean you’re unlikely to pay any Income Tax on your earnings as a foster carer.
Fostering is an important role. The government has applied an Income Tax exemption on foster care pay, called Qualifying Care Relief. This means foster carers don’t pay tax on the first £10,000 your household makes in any year. Foster care pay is subject to additional tax relief of up to £250 a week for every week a child is in your care. This is a broad overview – we recommend that you explore this topic of foster carer allowance and tax in more detail.
Every foster carer’s situation is unique but what we know for certain is that your fostering allowance won’t affect your entitlement to most state benefit payments. This includes Housing Benefit and Universal Credit, as well as your state pension. However, the exception is Jobseeker’s Allowance (JSA), which will be affected if you’re receiving a fostering allowance.
If you would like more information, please fill out our enquiry form. If you ask for a call back, a fostering advisor from your local National Fostering Group team will get in touch to explain more about how to become a foster carer, and answer any questions you have about foster care pay.