All foster carers receive a sum of money called a fostering allowance, which is designed to cover the cost of caring for a child. On top of this, some foster carers will receive fee payments (sometimes known as skills payments) to recognise their time, skills and experience.
As fostering allowances are set at a local level, the amount foster carers receive will depend on where they live, and on the age and needs of the children in their care. But every foster carer should receive at least the National Minimum Allowance for the country they live in. The fostering allowance should cover the costs of food, clothes, toiletries and all other expenses related to the child’s needs.
The amount of fee payments (or skills payments) depends on the fostering service. There is no requirement for fostering services to offer fee payments, and each fostering service will have their own policy about them. Usually, foster carers will only receive fee payments when they have a child in their care.
Allowances and fee payments should be made separately and clearly identified so that foster carers know how much fostering income should be spent on the daily expenses of caring for a child (the allowance), and how much can be spent on meeting their specific needs (thefee). Depending on income, foster carers may also be able to claim a range of benefits to help with costs.
Foster carers are classed as self-employed for tax purposes and need to register with HMRC. Further information regarding tax for foster carers is available here. You may also be able to claim a range of benefits.
Still have questions?
For more information about tax and National Insurance for foster carers, read our guidance, contact our Advice Lines or find out more about Williams Giles Xeinadin, who have a tailor-made fixed fee tax return service designed to meet the needs of foster carers.