You could earn hundreds of pound a week...
We’ve all seen the fostering ads on buses: earn hundreds of pounds a week for your spare room. Can it really be that simple? It isn’t, of course. In reality, the finances of fostering can be complicated and take time to unpick.
The first thing to know is that almost all foster carers are considered self-employed. You will not be employed by your fostering provider and will be responsible for sorting out your own tax and National Insurance.
You will receive a weekly allowance, which is primarily intended to cover costs you will incur when children live in your home. It is not a wage or salary and does not reflect the time you will commit to foster care. Some additional payments are made, such as for Christmas and birthdays, a holiday allowance and school uniforms. You may also be entitled to a setting up allowance, which is a contribution towards the purchase of essential equipment like car seats and highchairs, when you start fostering.
The weekly allowance itself is made up two elements. The basic allowance is paid to cover the cost of caring for a child. There is also a skills fee, based on your abilities and length of experience. Some fostering providers bunch the allowance and skills fee into a single payment. Weekly allowances do vary between fostering providers. In England, these are expected to at least match the minimum weekly allowance set by the Government.
What else are you covered for?
Reimbursements for other expenses must be claimed separately and may need prior approval by a member of the fostering team, such as the child’s social worker. Normally, you will be expected to cover daily motoring expenses from your allowance, such as driving to and from school, regular health appointments, and family trips and holidays. You may be able to claim mileage for longer, one-off trips or if you have agreed to care for children who are living at distance from school and family, but this is usually agreed in advance.
Your weekly allowance is conditional upon children living in your home. This means you won’t receive any payments if you have no foster children, even if it is only for a few days. You should consider how this might affect you financially. Experienced foster carers, Gail and John, transferred back to Wigan Council to foster, partly because they found they were having to manage quite long gaps when they had no foster children. “It is difficult when you are set up to foster but you have no children if you are used to factoring in the fostering allowance every week.”
Some fostering providers have special arrangements to make payments to foster carers for a short period when they take time off, in recognition of their commitment to children and young people. However, because you are self-employed there is no legal entitlement to holiday pay or absence through illness. You also need to make your own pension arrangements.
Technically, foster carers are liable for tax. However, there is an arrangement known as Qualifying Care Relief which provides a tax exemption of up to £18,140 a year per household. In practice, this means that very few foster carers have to pay tax on any allowances they receive for fostering. If you receive benefits, these are likely to be unaffected by fostering but it is worth checking.