For your hard work and efforts supporting a child or young person, you will receive foster care pay (which is also referred to as fostering allowance) that is paid on a weekly basis. This is to cover your reward element (for your time and contribution) and allowances for the child or young person.
Competitive and therapeutic foster carer pay
Evolve’s foster carer payments are up to £750 per week (for each child or young person) depending on their needs. You will also receive:
- Respite pay of 21 nights
- Holiday grant
- Support payment in transition from another agency
Your questions covered below
How will my foster care pay be taxed?
Tax and National Insurance (Class 4) is lower for foster carers generally because of the tax relief on your fostering income. This is referred to as Qualifying Care Relief and the allowances to calculate your Qualifying Amount are to be increased from 6th April 2023. Please see the summary below:
|Type of allowance
|From 6 April 2023
|To 5 April 2023
|Weekly amount – under 11
|Weekly amount – 11 and over
The fixed amount is per household for a full year and the weekly amount per child or young person. If you were to look after 2 children that were both over 11 (for a full year), you could earn up to £64,940 without any liability to tax and National Insurance (Class 4).
If your total payments from your placements are more than the Qualifying Amount, you can either pay tax and National Insurance (Class 4) through two methods:
- Simplified method– your total fostering income less your Qualifying Amount
- Profit method– if your expenses and capital allowances are higher than your Qualifying Amount, you may prefer to use this approach. You would have to keep detailed records of your fostering income and all outgoings.
Will I receive a payment when I have no placement?
You generally do not receive a payment if you have no child or young person in placement. However, if a local authority asks to secure your matching before a new placement (of a child or young person) then you can be paid a retainer. This is a pro rata payment of your foster carer payment.
Do I need to register as self employed?
Yes, when you become a foster carer, you need to register as self employed and complete the relevant tax returns for each tax year. This will be to cover any taxable income and payments from being a foster carer and your National Insurance (Class 4).
Can I still claim any benefits if I receive fostering income?
Income from being a foster carer is not usually relevant for income when assessing your status and eligibility for benefits. Being self-employed (as a foster carer), you are eligible to claim the majority of state benefits because of Qualifying Care Relief.
You should be still eligible to claim child benefit for your own children and any other children that maybe dependent on you. For the children that are placed with you, there will be exclusions as you are receiving a fostering payment.
We recommend you take relevant tax advice, which is available through Foster Talk, relating to the payments you will receive.