Money Matters and Insurance
The Fostering Service ensures that payments to Foster Carers are fair and paid in a timely manner. Foster Carers are provided with information both prior to approval and at the initial stage of their approval as part of the starter pack for Foster Carers with information relating to fees and allowances.
Please note that it would be unhelpful to note exact amounts in this policy as it is acknowledged that payments can be revised at future dates and over time. Therefore Foster Carers are requested to refer to the information sheet that details fees and allowances. The Fostering Service will consult with, and provide up-to-date information to Foster Carers on any changes regarding fees and allowances.
If you have any queries about allowances or if you think you have been under or overpaid, contact the finance officer in the Fostering Service as soon as possible and seek advice from your supervising social worker.
Payments to you are made in arrears, direct to your bank or building society.
Click here for the national minimum fostering allowances.
The national minimum allowances are only the base minimum rates set by government which it has deemed are needed to care for a child. They are split into different bands based around the age of the child.
The Fostering Allowance relates to the Child or Young Person in placement and is an age-related allowance. This allowance is a maintenance payment provided to cover costs that include household, food, clothing, travel, self-care, and pocket money.
The Fostering Allowance will only be paid for the duration the Child or Young Person is in placement and is calculated on the exact number of nights the Child or Young Person was in the Foster Carers household. The payment is calculated in sevenths across the week.
The Fostering Allowance is not a fee and is not provided to supplement Foster Carers income.
The Fostering Fee relates to a payment to the Foster Carer for their skills and experience. The Fostering Fee is paid per placement.
Every Child or Young Person is entitled to an annual holiday allowance, which can be used to take a Child or Young Person on holiday or may be spread over a period of time, for example summer holidays, day trips or special organised activities.
The annual allowance payable is double the weekly fostering allowance. It is paid upon request via your supervising social worker.
Every Child or Young Person is entitled to an annual allowance, which can be used to take a Child or Young Person on holiday or may be spread over a period of time, for example summer holidays, day trips or special organised activities.
The annual allowance payable is double the weekly fostering allowance. It is paid upon an application to the Fostering Support Team Manager.
A fixed sum of money is paid to foster carers in order to meet the extra cost of gifts to celebrate one special occasion per year.
An allowance is automatically paid to foster carers prior to the child or young person’s birthday date. This is to enable the foster carer to buy the child or young person birthday gifts.
Expenses are paid by the Fostering Service for making trips to hospital; attending reviews, contact arrangements or other exceptional travel expenses. This will be at a set rate per mile.
When you become a foster carer, support will be provided to get the fostering bedroom ready to receive a child into your care.
Discuss with your Supervising Social Worker, any requests for furniture or equipment.
When a Child or Young Person is initially accommodated, it may be necessary to equip the Child or Young Person with appropriate clothing which will be discussed and agreed at the Placement Planning Meeting. Once agreed, there is an expectation that Foster Carers demonstrate proof of purchase to the Supervising Social Worker by providing receipts.
For future clothing needs, Foster Carers have the ability to spread the purchase of clothing over a period of time to take into account growth spurts or the changing seasons. There is a percentage of money within the fostering allowance that takes account of wear, tear and growth, therefore Children and Young People should always be clothed to a very good standard.
It is the expectation that all Children and Young People will be properly and reasonably dressed to attend school and participate in school-based activities.
Foster Carers are required to secure value for money by shopping wisely
Foster Carers can request contributions towards badged school uniform items an annual basis for the start of the school year. Please note part of the fostering allowance covers the normal cost of clothing and non-badged items of school uniform.
Receipts are required for school uniform purchases.
The cost of getting birth certificates (and copies), passports and Life Story books will be met by the Childrens Social Work Team.
Information is also available from the GOV.UK website about passports.
Foster Carers are self-employed and you are responsible for their own arrangements in respect of income tax and national insurance and yearly self-assessment returns. As such the Fostering Service is unable to provide guidance and support in this area, however Foster Carers are advised to contact Fostering Network for any queries and advice on these matters.
Foster Carers are provided with regular remittance slips following bi-weekly payments and can request a statement of payment by the Fostering Service at the end of each tax year or sooner if required.
When you are fostering, you will need to be registered as self-employed and file tax returns. See File Your Self Assessment Tax Return Online.
You will be entitled to qualifying care relief which means that you will be entitled to:
In a tax year, households do not pay tax on a fixed amount of the money they earn from fostering. You will still pay tax on money you earn from a job or investment.
On top of this exemption, you also get tax relief for every week (or part week) that a child is in your care.
All payments made to you will be itemised. You should keep this information as a record for income tax purposes.
For further information and current figures, please see: Foster Carers Relief Information (HMRC) and Help and Support for Foster Parents in England.
See relevant information on the GOV.UK website.
Please note that Foster Carers are not eligible to receive child benefit for a fostered Child or Young Person and the Child or Young Person cannot be included in the foster family's claim for benefits or tax credits. Foster Carers in receipt of benefits should contact the benefits agency for advice where necessary or Fostering Network who can provide advice.
DLA is a benefit to help support children under 16 with care and mobility needs. Foster Carers who apply for DLA on behalf of the Child or Young Person must inform the Child or Young Person's Social Worker and the Supervising Social Worker of the application and receipt of benefit if such application is successful. Two rates of DLA can be claimed for the "lower rate" and "higher rate" and each has a care and mobility component.
Where a Child or Young Person is in receipt of DLA, this allowance should be spent on promoting the welfare of the Child and Young Person. How DLA will be spent should be discussed with the Child or Young Person's Social Worker and recorded as part of care planning for the Child or Young Person.
A record should be kept by Foster Carers of how the allowance is spent and this record should be available on the request of the Child or Young Person’s Social Worker or the Supervising Social Worker.
The Supervising Social Worker will also discuss this with the Foster Carer within supervision visits.
When the Child or Young Person moves on from placement, any items purchased from DLA monies is their own property which they should take with them.
PIP is not a means-tested benefit and is not affected by earnings, other income or savings. It has two parts - daily living component for people who need help to take part in everyday life and mobility component for people who find it hard to get around.
This will need to be applied for prior to the Young Person turning 16.
The same principles apply as for DLA in respect of how the monies will be spent however it is recognised that Young People will have increasing input at this stage and might take responsibility for the spending of this. This will be discussed and agreed with the Young Person’s Social Worker.
If you foster you may be eligible for National Insurance Credits which count towards your State Pension.
You should keep a record of how the allowance is being spent on a child/young person. You should keep receipts where possible. This helps build a record of what has been spent, which you can show if asked about it at a later date.
You must inform your Home, Building and Contents and Car insurance company once you have been approved as a foster carer.
Tell them about the numbers of children and age ranges you expect to take. You should ask the insurance companies for written confirmation that they have included foster children on your policies. A copy of these letters should be shown to your Supervising Social Worker.
Foster Carers who have approval from Rochdale Borough Council Children’s Services to take Children and Young People in placement abroad, must have holiday insurance to cover a wide range liabilities including health, damage, delays in travel, etc.
Last Updated: December 11, 2025
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