At the heart of fostering are people who selflessly open their hearts and homes to provide a stable environment for vulnerable kids. But do foster parents get paid? Becoming a foster carer is an incredibly fulfilling experience, but it is also a significant commitment. To recognise their hard work, foster parents receive regular fostering allowance payments as a token of appreciation.
Table of Contents
1. What Is a Fostering Allowance?
2. Understanding Allowances for Foster Carers
a. Fostering allowance breakdown
b. Different types of foster care pay
c. What is a Bridge Support allowance?
3. How Much Do Foster Parents Get Paid?
4. Benefits and Discounts for Foster Carers
a. Foster care benefits
b. Foster care discounts
5. Other Financial Considerations for Foster Carers
a. Cost of raising a child
b. Can you foster and work full time?
c. Fostering after retirement
6. Making Fostering Allowances Go Further
7. Different Ways to Earn Money as a Foster Carer
a. Refer a friend schemes
b. Ambassador programmes
8. Frequently Asked Questions
What Is a Fostering Allowance?
A fostering allowance – sometimes called a foster allowance or foster carers allowance – is a type of financial support provided to individuals or families who take up fostering. Fostering allowances are designed to alleviate the financial worries of foster carers, allowing them to devote their time and attention to helping children and young people flourish.
After all, financial concerns often discourage prospective foster carers from further exploring the possibility of fostering. Some may worry about leaving behind a well-paying job, while others may be struggling financially. However, it’s important not to let financial constraints get in the way of providing a loving home. This is why the fostering allowance exists.
Understanding Allowances for Foster Carers
There’s no two ways about it: fostering is a life-changing commitment. Consequently, most fostering agencies want to make sure that their foster carers feel financially secure. When thinking about fostering, there are various things to consider that will influence your fostering earnings.
Fostering allowance breakdown
What does the fostering allowance cover? Irrespective of the fostering agency you work with, this will consist of two components: the professional fee and the funds allocated to cover the needs of the child or children in your care.
1. Professional fee for the carer
The professional fee acknowledges your training, expertise and experience as a foster carer. As a result, the amount you receive may vary based on these factors. This portion of the payment serves as recognition for your hard work and the exceptional care provided to the child or children under your watch.
2. Childcare costs
To further alleviate financial worries, the fostering allowance covers the essential requirements of the foster child, including clothing, food, transportation, activities and savings. When you register as a foster carer, your chosen agency should provide you with a clear breakdown of how this money should be allocated, ensuring the child has a healthy, joyful and well-rounded upbringing.
This flexible approach is the reason no fixed fostering allowance exists. Foster carers come from a variety of different backgrounds and have various degrees of experience. As you progress and acquire more knowledge, the amount you receive is subject to change. Similarly, every child is unique, with some requiring more support than others.
Different Types of Foster Care Pay
There are various types of fostering that will call for different skills, expertise and training. As a result, the pay scale for foster carers in the UK can vary considerably.
Different fostering allowances include:
- Parent & child fostering allowance
- Emergency foster care pay
- Respite fostering allowance
- UASC foster care pay
Monthly pay for foster carers depends on the type of care you provide, the demand for specific types of fostering, in addition to your individual skill set. For instance, the allowance for a therapeutic fostering package can be significantly higher than a standard fostering placement. Foster carers who look after multiple children or young people at once will also be given a higher fostering allowance.
What is a Bridge Support allowance?
Sometimes, due to circumstances beyond their control, foster carers have to wait a few weeks or months before welcoming a child into their care. This is why some fostering agencies, including Compass, provide a support system known as the Bridge Support Allowance.
The Bridge Support allowance is another type of allowance for foster carers that offers a weekly payment for carers still awaiting a child. These payments are essentially a loan that are provided on a temporary basis and can serve as a financial safety net during challenging times. In the case of Compass, foster carers are provided with a weekly payment of £155 for up to 12 weeks.
Once the foster carer welcomes their first foster child into their home and their regular fostering allowance begins, they will start repaying these support payments in small instalments. The repayment amount will depend on the specific type of fostering arrangement.
How Much Do Foster Parents Get Paid?
The amount of fostering allowance a foster carer is entitled to will depend on a variety of factors, including the age and specific needs of the child, as well as the foster carer’s level of training and prior experience. However, on average, the weekly foster care allowance is approximately £460. It’s important to note that this amount may be higher or lower as a result of the factors mentioned above, as well as the number of children the foster carer is responsible for. In terms of annual salary before tax, this averages £24,000, and can climb as high as £82,800.
Curious about how much you could earn?
Check out our Fostering Allowance Calculator
Benefits and Discounts for Foster Carers
In addition to the fostering allowance, because foster carers are classed as self-employed, they are generally eligible to claim most state benefits in the UK.
Foster care benefits
As a foster carer, you can still claim means-tested benefits, as the fostering allowance is not considered income for this purpose. This means you can claim a number of benefits, including:
- Universal Credit
- Carer’s Allowance
- Child Tax Credit
- Working Tax Credit
- Jobseeker’s Allowance
- Housing Benefit
- Council Tax Reduction
It’s important to note that eligibility for these benefits is assessed on an individual basis and may vary depending on personal circumstances. It’s advisable to consult with the relevant government agencies or seek advice from Citizens Advice to determine the benefits you may be eligible for as a foster carer.
Foster care discounts
One of the perks of being a foster parent is all of the discounts you can claim to maximise your fostering allowance. These include:
Blue Light Card
Most people associate a Blue Light Card with workers in the NHS, armed forces or emergency services – but did you know that foster carers can apply for one too? The card offers foster carers a wide range of online and in-store discounts, as well as some welcome freebies. The company works with both large and small companies across the UK, saving members over £100 million per year.
Like the Blue Light Card, the Max Card is another scheme that offers a variety of foster family discounts. The card is aimed at foster families and families with children with additional needs and is great for foster carers looking to make the most of amusement parks and family attractions. This is because the Max Card can be used to gain free or discounted entry to over a thousand venues across the UK.
Discount For Carers
Discounts For Carers is an online website offering a wide range of foster care discounts and free things for foster parents. This includes special discounts and deals on shopping, travel, motoring, finance, utilities and insurance policies. The website provides discounts from nationwide and independent businesses that are keen to support foster carers.
Other Financial Considerations for Foster Carers
Cost of raising a child
In recent years, with the rising inflation and cost of living, families have become more and more frugal with their expenses. The rising cost of raising a child has prompted foster carers and birth families to be increasingly mindful of their spending and saving habits.
A report conducted by the Child Poverty Action Group (CAPG) in 2019 revealed shocking statistics regarding the cost of raising a child. It found that for single-parent families, the cost of raising a child up to 18 was a staggering £185,000, compared to £151,000 for couples. These findings not only highlight the financial challenges faced by families across the UK, but emphasise the importance of effective budgeting and financial planning for both foster carers and birth families.
On average, there are roughly 10 costs you’ll need to budget for when raising a child in the UK. Keep in mind that allowances for foster carers are designed to cover these expenses:
- Pocket money
Can you foster and work full time?
Unfortunately, there are certain limitations on working outside the home when you choose to become a foster carer. One of these is you cannot usually foster while working full time. This presents a challenging reality for many foster carers, especially if you are attached to your current career, but it is not without its workarounds. In the case of a couple, for instance, one person could work full time while the other stayed in part-time work. And of course there are exceptions to every rule. Certain workplaces are adaptable enough to offer carers a flexible schedule, while other professionals make their own working hours and many are able to work from home. Yet other carers have reliable support networks that can step in whenever needed.
Though these arrangements may not be ideal for everyone, fostering allowances provide adequate financial support, which enables you to treat fostering as a full-time position. When considering whether or not you should be a foster parent in full-time work, it is crucial to prioritise the well-being of the child. Their needs should be the primary focus in any decision.
Fostering after retirement
If you are thinking about fostering after retirement, retirees who become foster carers can still benefit from a fostering allowance, ensuring financial support throughout their fostering journey. Fortunately, they can also access their pension while fostering, though the specific rules may vary depending on the type of pension that they receive.
For a state pension, individuals can continue to receive it while fostering so long as they have reached the state pension age of 66. Similarly, with a private pension, retirees can also access their pension payments if they have reached the agreed age with their pension provider.
Pensioners who foster may also benefit from a reduction in taxes, thanks to schemes such as the Qualifying Care Relief tax scheme mentioned in our FAQ section. In addition, they may be eligible for benefits including Pension Credit, which offers additional financial support. If retirees have already claimed their state pension, they can apply for Pension Credit through the GOV.UK website.
In any case, it’s essential to consult with your pension provider and seek professional financial advice. This will ensure you make informed decisions and make the most of your fostering allowance.
Making Fostering Allowances Go Further
In the midst of rising inflation, households across the UK are facing significant financial strain. Thankfully, to make the most of your foster carer’s allowance and survive the cost of living crisis, families can adopt strategies that will alleviate the impact on their finances. There are various aspects of your household finances that can be reassessed and optimised:
- Save money on household bills. By implementing cost-saving measures, families can navigate the economic challenges with greater resilience. Such measures may include negotiating bills, draught-proofing your home, installing smart metres, freezing interest on your credit card, etc.
- Save money on your food shop. When it comes to saving money at the supermarket till, be sure to check for yellow stickers, buy own-brand products, take advantage of supermarket loyalty cards and more.
- Know where children eat free. This can take a lot of financial and mental pressure off your shoulders when wanting to keep your children entertained and happy.
- Discover free family activities. There are plenty of free things you can do as a family, such as an indoor camping adventure, arts and crafts and geocaching!
- Make the most of foster carer discounts. On top of the previously mentioned benefits for foster carers, there are various discount schemes foster carers can get involved with.
- Seek food bank support. Food banks are an essential support system for households in crisis. All you need is a food bank referral, which you can easily claim by contacting Citizens Advice.
Different Ways to Earn Money as a Foster Carer
In addition to the fostering allowance, there are other ways to earn money while fostering.
Refer a friend schemes
Some agencies offer referral programmes that reward foster carers for recommending applicants to enter the world of fostering. At Compass Fostering, for instance, applicants who are referred by a foster carer are eight times more likely to be approved for fostering. Foster carers are actively encouraged to participate in the foster carer recruitment process and can earn up to £3,250 per referral. This provides foster carers with the opportunity to not only contribute to the growth of the fostering community, but to earn additional income through successful referrals.
Another avenue for earning money as a foster carer is to become a Carer Support Ambassador. Many fostering agencies offer current foster carers the opportunity to take on this role. Carer Support Ambassadors are there to support fellow foster carers, leveraging their first-hand experience and understanding of the challenges involved. They offer emotional and practical assistance, including transportation for contact meetings and social activities, mentoring on record-keeping, and more.
In addition, fostering agencies may also allow foster carers to support the agency in other ways. This could involve writing blog posts, taking part in staff interviews, contributing to the development of new policies, and many other related activities. If you are interested in fostering and seeking additional income opportunities, speak to your Supervising Social Worker about the specific options available to you. Any opportunities for foster carers to earn extra income will vary greatly from agency to agency.
Frequently Asked Questions
1. Do foster carers pay tax?
Yes, foster carers do pay tax, though they also benefit from different tax relief schemes.
2. What tax relief for foster carers is available?
Becoming a foster carer makes you eligible for a significant tax reduction known as Qualifying Care Relief. Under this tax scheme, foster carers receive a fixed tax exemption of £18,140 per year. This exemption is equally shared among all foster carers in a household, and means you do not have to pay tax on the first £18,140 of your fostering allowance.
In addition to the tax exemption, fostering tax relief allows foster carers to avoid paying tax on a portion of their earnings beyond £18,140. For children under 11 years old, foster carers do not have to pay tax on the first £375 of their weekly fostering allowance. For children aged 11 and above, this amount increases to £450.
These tax relief measures aim to support foster carers financially and acknowledge the valuable work they do in providing care and support to vulnerable children. For more information about financial help for foster carers, see the UK government’s Help and support for foster parents page.
3. Are foster carers self-employed?
Yes, foster carers are self-employed. This means you’ll need to register as such. Learn how to do so by reading all about Tax and Foster Care. If you are already registered as self-employed, there is no need to repeat the registration, but it is strongly advisable to notify HMRC as soon as you begin fostering. Failure to do so may result in a penalty.
4. Do foster carers pay national insurance?
As a foster carer, you are responsible for paying your own National Insurance contributions throughout your time in this role. However, once you reach the state pension age of 66, you are no longer required to pay National Insurance, unless you are making class 4 contributions. The obligation to pay Class 4 NI depends on the level of profit you currently generate, so if your profit is below the threshold, you are exempt from paying Class 4 NI.
For everyone else, once approved as a foster carer, it is essential to register as self-employed and start paying National Insurance Contributions. This process involves applying for self-assessment with HMRC. You should also stay informed about any tax and National Insurance requirements that may affect you, and seek guidance from a tax professional to ensure compliance with all regulations.
5. Do foster carers pay council tax?
Typically, all foster carers are required to pay council tax. However, your Local Authority may offer a special exemption to alleviate this burden. Keep in mind that foster carers enjoy significant tax reductions, so a lower council tax may not be necessary.
6. What benefits can foster carers claim?
Many benefits are not affected by your fostering allowance – see our benefits and discounts section.
7. Can foster carers claim child benefit?
Unfortunately, this is one benefit that forest parents are unable to claim. Being a foster carer does not prevent you from claiming child benefits for your own dependent children, as long as you meet the eligibility criteria. However, you cannot claim benefits for the foster children in your care, since you already get a fostering allowance to cover their needs.
8. Can foster carers claim their pension while receiving a fostering allowance?
Retirees can still access their pension when becoming a foster carer – see our fostering in retirement section.
9. When do foster care payments start?
In many cases, new and current foster carers become eligible for Bridge Support Allowance. This means foster parents can start receiving payments as soon as they are approved as a carer, while still waiting to be assigned a child. Bear in mind that this usually works as a loan which can be paid back in affordable instalments. Once a child is placed in your care, you should start to receive your full fostering allowance.
Have we answered all of your questions?
Eager to begin your fostering journey, but still worried about your finances? Compass Fostering is here to be informative, responsive and supportive – so do get in touch if you have any questions.