FOSTER CARE ALLOWANCE / FOSTERING Payments
Looking after children can often be costly and as a foster parent, you may experience higher than usual costs while caring for children in your home. The main source of income for foster carers is the foster carers allowance or fostering fee’s if you are fostering via an independent foster agency (IFA) like Pride.
The fostering allowance or fee normally paid is up to £650 per child per week depending on children’s needs (sometimes more in unusual cases) and is intended to not only help you meet the needs of the children that you are supporting but this also provides foster carers with a decent income. The fostering allowance is available to all foster care providers in the UK.
Providing foster placements in your home is a full-time occupation and for tax purposes, foster parents are classed as self-Employed and must register as such with the HMRC. This means that you will be responsible for paying your own taxes and national insurance contributions due. You can find more information about self-employment here: https://www.gov.uk/topic/business-tax/self-employed.
While once foster care was seen as somewhat of a vocation, being a foster parent is now seen as a desirable career choice. Classed as a professional, approved and registered foster parents are respected figures in the community and as such, pay rates for foster parents who provide care for IFA’s are very competitive in today’s job market.
The costs of looking after foster children in your home can be more than you may think. Beyond the basic costs of food, clothes and toys there are quite a lot of other things that you will need to pay for that you may not have considered, for example; pocket money, bus fare, day trips and the cost of school uniforms. The list is not exhaustive and this is part of the reason that you receive the foster care payments allowance. You should not find yourself out of pocket when looking after your foster child.
The type and amount of fostering allowance that you receive will depend on the type of foster care that you provide as well as who you work for:
Local Authority Foster Care
Foster carers who work with the local authority usually have direct contact with the local social services team. Most local authorities pay fostering allowances close to the rates that are set out by the government each tax year. The rates for 2015-2016 range from between £123-£216 per week depending on where you live and the age of the child.
Independent Fostering Agencies (IFA’s)
IFA’S (independent fostering agencies) pay fostering allowance in a slightly different way and is usually up to £550 per child per week depending on children’s needs. In some cases, the weekly fees may be much higher, for instance, caring for a child with complex needs or providing a foster placement for a child on remand. Fostering Payments for these types of placements would be discussed on an individual basis.
A private fostering arrangement is where a parent has made their own arrangement for their child to be cared for by someone else without the involvement of the local authority. This is usually a friend or family member. In the case of a private fostering arrangement, there is no fostering allowance payable.
The average weekly cost of caring for a foster child set out by the fostering network*:
Costs subject to an enhancement for London and the southeast.
Self-employment and tax
The income that you receive from a fostering allowances or fee is classed as self-employed income. You will receive gross foster care payments with no deduction for income tax or national insurance. Once you are registered as self-employed with the HMRC you will need to complete an annual self-assessment tax return in order to work out how much tax you will need to pay. It is important that you keep a record of all fostering payments that you have received, this will make things much easier when you come to do your tax return.
You will also need to make regular national insurance contributions in order to keep your national insurance record up to date. You will need to pay class 2 contributions which is around £12 per week. Failure to do so could have implications further down the line when it is time to draw your state pension.
Tax benefits for foster parents!
There are some very attractive tax incentives available to foster parents not least an exemption of £10,000 plus a weekly tax relief of up to £250 per week per child means that you may not have to pay tax a substantial part of your earnings.
The reasoning behind this is that the government understands that a proportion of the fostering allowance is to help you cover the costs of providing care for a foster child and is not so much income but for expenses. Having these extra tax benefits helps many foster parents provide the best care and environment possible. This is another reason why you will need to keep hold of any foster care payments received as well as any expenses, you will need to produce these in order to claim the tax relief. It is also important to make a record of the times and dates for each foster placement starting and ending.
In addition, to this, you may still be able to claim other benefits. As fostering allowance is not counted as income for means-tested benefits, you may also be able to claim:
- Income Support
- Job Seekers Allowance
- Council Tax Reduction
- Disability Living Allowance
- Working Tax Credits
- Housing Benefit
You would need to apply directly to see if you would be eligible for the benefits above dependent on your circumstances.
Council tax reduction
It may be possible for you to get council tax relief of up to 100%, again depending on your circumstances you could see your council tax bill vastly reduced. You would, of course, need to speak to your local council to find out if you qualify for this benefit.
More support available
There is plenty of help available for foster parents, from regular training sessions and local support available around the clock. Money of course helps but it doesn’t solve everything you are not on your own with us. At pride fostering we fully support our foster carers, if you need help, we are always there!
In Essence, fostering allowances are there to help support you as a foster carer and it allows you to focus on creating a warm and inviting foster home instead of having to think about income and maybe have to get a job in order to make ends meet. Being able to provide full-time foster care means that the children placed with you get a stable and consistent environment during their time with you.
Being able to offer attractive fostering payments means we can draw on a high level of skilled and professional foster parents able to offer the very best experiences to children in great need of a temporary home. Making the most of these fostering allowances and payments can make all the difference.
Choosing the right fostering agency:
When it comes to choosing a fostering agency, there are a few key things that you should look out for, firstly visit their website, how a company presents itself can say a lot about the organization itself. Check out any testimonials from any foster parents already on their books. You want to know that you will feel happy and supported at all times, being a foster parent can be stressful at times and knowing that the agency is committed to supporting you will be a big help, make sure that there is some nearby support that you can access when needed.
You may want to check out the credentials of your chosen agency, Ofsted inspects each fostering agency in the UK. This ensures that all care standards are being met. You will want to be sure that your chosen organization meets or even exceeds these standards. You can find reports on all fostering agencies here http://reports.ofsted.gov.uk/
You may also want to be sure that the agency offer training to foster carers, most agencies offer this free of charge but this isn’t always the case so you may want to check this out, that way there are no nasty surprises once you have become an approved foster parent.
Remember to check out the company policy for fee payments and make sure that you are happy with the compensation offered. Each IFA pays its fee’s in a slightly different way and you need to be sure that the payments set out work for you.