Finances
Fostering Allowance
At Diverse Fostering, we offer a clear, transparent, and competitive financial package to recognise the commitment involved in fostering. Please see below four examples of our financial package.
Our fostering allowance is calculated per week and is based on three age bands:
- 0–4 years – £400 per week
- 5–10 years – £440 per week
- 11–18 years – £480 per week
- We also pay additional payments for the following: complex needs and complex health, parent and baby placements and for children who are stepping down from residential.
The figures above do not include our respite payment (2 weeks paid respite), long term placement bonus, annual training bonus, Christmas payment, Birthday payment and placement start-up fee.
Payments are hassle-free and made electronically, directly into your bank account. In addition to the weekly allowance, we provide new placement start-up payments per child, long-term placement bonuses, an annual training bonus, and additional allowances for birthdays and religious festivals.
Foster carers are entitled to up to 14 days of paid respite each year, recognising that fostering is a demanding, full-time role and that carers need time to rest and recharge. That means if you take two weeks respite you still get paid as normal and if you choose not to take the respite, you get an additional two weeks allowance per child.
There are also opportunities to increase your income through becoming a Carer Recruitment Ambassador or by referring prospective foster carers, with referral bonuses paid where carers are approved.
Where carers have the space and capacity, there are opportunities to care for more than one child or young person at a time. Foster carers are also eligible for National Insurance credits, which count towards your State Pension. We are open and transparent about all payments, with a clear Carer Finances Handbook that explains exactly what is provided and when.
Foster Carers and Tax and National Insurance:
Foster carers in the UK are classed as self-employed for tax purposes and are required to register with HM Revenue & Customs (HMRC) and complete a Self Assessment tax return each year. However, most foster carers do not pay tax on their fostering income due to a generous tax relief scheme known as Qualifying Care Relief.
This scheme provides a tax-free threshold made up of a fixed annual amount per household, currently around £19,690, plus a weekly amount for each child in your care of approximately £415 per week for children under 11 and £495 per week for young people aged 11 and over. As long as your total fostering income remains within this threshold, no income tax is payable on your fostering payments.
Even if a foster carer has a tax liability from their fostering income, they may not need to pay any tax if they have not used their personal tax allowance (for example, if they foster full-time and have no other employment). Every UK resident has a personal tax allowance which may vary with their circumstances. This is the amount of income you can receive each year, including any taxable profit from fostering, without having to pay tax on it.
https://www.gov.uk/support-for-foster-parents/tax-arrangements
Foster Carers and Tax and National Insurance:
Foster carers pay National Insurance contributions (NICs) to qualify for certain welfare benefits and the State Pension. There are two types of National Insurance for people who are self-employed, depending on their profits: Class 2 and Class 4. Foster carers who register as self-employed are automatically registered for Class 2 NICs. Foster carers will only pay Class 4 NICs if they make a significant profit on their fostering income.
Foster carers have a few options in terms of paying these contributions. The best option will depend on their individual circumstances, including whether they have a full National Insurance record. Foster carers can check their National Insurance record on the GOV.UK website.
EXAMPLE ONE
A foster carers has two children aged 1 and 3 are in placement. The foster carer receives £400 per week for each child.
Annual fostering income
£800 per week × 52 weeks = £41,600 per year
Post-tax earnings
£41,600 – Tax free, subject to individual circumstances.
Equivalent annual salary
Equivalent Annual Salary £41,600
EXAMPLE TWO
A foster carers has two children aged 3 and 6 are in placement. The foster carer receives £400 per week for the 3-year-old and £440 per week for the 6-year-old.
Annual fostering income
£840 per week × 52 weeks = £43,680
Post-tax earnings: £43,680 – Tax free, subject to individual circumstances.
Equivalent annual salary Equivalent Annual Salary £52,000.
EXAMPLE THREE
A foster carers has three young people aged 11, 13 and 16 are in placement. The foster carer receives £480 per week for each young person.
Annual fostering income £1,440 per week × 52 weeks = £74,880 per year
Post-tax earnings £74,880 – Tax free, subject to individual circumstances.
Equivalent annual salary Equivalent Annual Salary £90,000.
Please note
Respite payments and additional bonuses are paid on top of the figures shown above
Find out more...
Everyone is different and we are happy to talk with you to discuss what foster care might look like in your circumstances. Please contact us to explore further!