Money Matters a guide to fostering finances

Author:FosterWiki
Published:December 2021
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Money Matters a guide to fostering finances

Money Matters A guide to fostering finances

“Money does matter, it matters to everyone, it goes without saying that being paid in life is important. Foster carers should never be afraid to talk about money, they have bills to pay just like everyone else and for the vast majority of carers fostering is a full-time job.

Of course, you are not coming into fostering “just for the money” but in today’s social and economic landscape very few people can afford to do altruistic voluntary work, besides which foster carers should be recognised and valued and their skills, qualifications and experience should be appropriately remunerated as they are in any other profession”
Sarah Anderson, Founder FosterWiki

1. Introduction to Money Matters a guide to fostering finances

Foster carers receive payments in allowances and fees.

Foster care is devolved to each fostering provider, both local authority and independent fostering agency, it is, therefore, their decision as to the levels of pay and what form those pay structures take.
This is a basic introduction to how ‘the money works’ for foster carers.

2. Pay, Allowances and fees

All foster carers receive a weekly fostering allowance, this is to cover the cost of caring for a fostered child. This includes food, clothes, toiletries, travel and all other expenses incurred. Fees or skills payments will often be made on top of allowances. While all foster carers receive an allowance, there is no mandatory or statutory requirement for fee/skills payments to be made.

Payments and allowances should be separate and clearly identified so that foster carers know which portion of their fostering income should be spent on caring for the child in their care, and which is for the job that they do.

However, some fostering services, usually the private agencies will make a lump sum ‘financial package’ which does not make the split clear.

Local authorities sometimes have a ‘skills levels’ system varying from level 1 for the basic entry-level carer to level 3 or 4 for the more experienced, skilled and qualified carers who take on children or young people with additional needs or extreme behavioural issues.

The children’s ‘allowances’ are set at the local level and vary widely across the UK according to the age and needs of a child, but in England, Wales and Northern Ireland foster carers should receive at least the national minimum rates (see links below).

Scotland does not currently have national minimum allowances for foster carers, although the Scottish Government has committed to making recommendations in the near future.

What allowances should cover

Allowances are designed to cover direct expenditure on the child and additional household costs (such as furniture and furnishings, utilities and insurance).
National Minimum Allowances can be found here:
England: https://www.gov.uk/support-for-foster-parents/help-with-the-cost-of-fostering
Wales: https://www.flintshirefostering.org.uk/en/PDFs/National-Minimum-Allowances-for-Foster-Carers-2020-2023-English-letter.pdf
Scotland: Scotland does not currently have national minimum allowances for foster carers, although the Scottish Government has committed to making recommendations in the near future.
Read more about it here: https://www.thefosteringnetwork.org.uk/mfcf

3. How does it work

As a foster carer, you are classified as ‘Self-Employed’.
You should register with HMRC as self-employed and will fill in a tax return each year.

Fostering has different and generous tax allowances. You can find out about self-employed tax returns, allowances, accountants and more in FosterWiki’s ‘The business side of self-employment’ and “Your role as a professional” in the members’ area. https://fosterwiki.com/members/

In terms of when you are paid, it can vary, most providers pay weekly in arrears and some fortnightly. They send you an end of year statement that you can use for your tax returns and your accountant if you have one.

4. Tax & National Insurance

Fostering carers pay tax, however, there are generous tax allowances. Carers also pay their own National Insurance.
This information is available in the FosterWiki members area and in these government guidances;

https://www.gov.uk/support-for-foster-parents/tax-arrangements
https://www.gov.uk/government/publications/qualifying-care-relief-foster-carers-adultplacement-carers-kinship-carers-and-staying-put-carers-hs236-self-assessment-helpsheet/hs236-qualifying-care-relief-foster-carers-adult-placement-carers-kinship-carers-and-staying-putcarers-2019
https://www.gov.uk/government/publications/national-insurance-credits-for-parents-and-carerscf411a?fbclid=IwAR1lbbpG-pH1FeoboIV88YgX0zpj1BaSKs4yQJSS8-9s5ukIbCGSAdiI3ok

5. Mileage and expenses

The majority of fostering provides pay carers 45per mile. However, when the provider will pay mileage can vary. Some will cover all the foster carer’s miles that are accrued in their role of caring for a child, some agencies will only pay over and
above a certain number of miles a day.

The method for claiming expenses also varies, so make sure your supervising social worker has given you the form, whether that is a physical or electronic one. It is good practice for providers to pay expenses in a timely manner.

6. Children’s holiday/birthday and festive payments

Foster carers generally receive extra payments to cover children’s birthdays, holidays and festivities such as Christmas.

Foster carers also generally receive two weeks extra child’s allowance a year to cover the children’s holidays, and one week’s allowance for their birthday and one for Christmas.

Some fostering providers will build these amounts into the foster carers weekly payments.

7. Foster carer’s holiday/short breaks/respite payments

Again due to the foster carer being devolved to each fostering provider you will find the question of holiday/short breaks/respite payments also varies.

Most good fostering providers will have a foster carers holiday/respite allocation written into their policies and some into their fostering agreements.

It is rarely more than 2 weeks per year, and payments can vary between full fostering allowances and fees for time off, some providers will only pay the fees and give the fostering allowance to the respite carers.

8. Childcare

Please see the FosterWiki page on 30hrs free childcare here: https://fosterwiki.com/wiki/30-hours-free-childcare/

9. Damage and accidents

The local authority is the corporate parent and they will share parental responsibility to different degrees with the birth parent. Foster carers never have parental responsibility.
Ultimately they are responsible for the actions of the child in your care. They will always ask you to claim on your household insurance for damage accidental or intentional as it is cheaper for them.
However, it is not as simple as it seems as;
- Household insurance rarely covers intentional damage and may not cover accidental if they realise it’s a looked after child in the care of the local authority.
- Some insurance companies (2 that we can find) specialise in fostering household insurance, however, our feedback from carers and research suggests that;
- These specialist companies are very expensive.
- If they do cover for intentional damage by a looked after the child at least one of them requires a police report number, and a foster carer would be very reluctant to report damage as a police matter unless extremely serious.
- Even if your insurance did cover it you would still have to pay the excess.

10. Pensions, sick pay and retainers.

Foster carers have no pension provision, other than state pension.
Foster carers are not entitled to sick pay. Some fostering providers pay retainers to carers in between placements, however, this is very rare. On the whole, if you have no placement you will have no income.

11. Benefits – Income support, universal credit and tax credits

This FosterWiki page is currently in development.

12. What foster carers say

“The qualifying tax relief as a foster carer hasn’t changed for two decades and many carers find themselves paying tax. It’s about time that went up”

“I am very lucky as I get 21 nights a year fully paid annual leave at my fostering agency. We get birthday Christmas Easter and one-holiday payment allowance for the child’s summer holiday. We get paid a payment of £20 when we attend support groups and training.

At the end of the tax year, we have a slip sent to us showing exactly what we earned that year. A monthly payslip is emailed each month and the money goes into the bank like clockwork.”

“I work full time when I don’t have placements and was told the LA expect me to either give up work or work part-time around a placement as clearly they think I can’t do both! Even though I’m Mon-Fri, work from home investigating complaints and only send emails to the customers!”

“Our weekly pay goes into the bank but it’s just money. We don’t get any info on what’s been paid and why. Also claiming Milage is a phenomenally complicated affair that rarely ever gets paid even if you are successful at working out the system and submitting your claim.”

“In our LA allowances have not increased for years, fees did increase last year but had not for about 9 years. We do not have bands. Carer and Progressed Carer. There is also a specialist carer. Progressed is hard to get because LA has to pay a retainer. You only get this Progressed if you pester loads. We now get 45p per mile used to be so many miles before you could claim. We get birthday and holiday money which does not cover costs. Respite 2 weeks but unlikely to get it. Members of Fostering Network paid for by LA. No clothes allowance as automatic need to make a fuss. Passes for LA leisure centres but lots now private so useless. Have to fight for LA to pay out on their insurance. No petrol money for hospital visits.”

“If you are caring for a child from the LA under the disabled team, you are usually awarded so many nights a year short break at the panel, and fully paid. And will also include an enhanced payment.”

“I have always considered myself quite lucky with finance from my LA. They did give grants for furniture if needed and clothes etc when a child first placed but as far as l know now that doesn’t happen anymore. Birthday and Christmas allowances are not really adequate if you have your own children at home too as l personally chose to spend the same on them all which always seemed to go over the allowance. The actual day to day allowances is fair too as is the mileage paid at 45ppm from mile 1. I must say that now we are in continuing care post 18yrs and a whole different ball game, very poor finance but did insist l got the mileage still in order to transport to the nearest college bus stop. l haven’t found it too bad overall but realise that not everyone is so lucky.”

“All fuel expenses are so different. Some deduct the first 10-20 miles off per journey! Some won’t give you contact travel expenses, some do. Some will provide a full training travel allowance. All LA should have damage insurance. Do not be fobbed off with claim off your own house insurance or car insurance as will be out of pocket with excess & premium going up.”

“We should be provided with a summary of earnings at end tax year with a breakdown per child, expenses.”

“Some will not support a travel allowance for medical appointments. Some LA & IFA deduct savings from our allowance before we receive it & save on the child’s behalf ( so they pay tax on it). Some make the foster carer pay tax on savings & advise amount per child we should save (normally rises with child’s age).”

“If a taxi is agreed for a child, get it in writing. As quite often you take a child on & no taxi arranged & a foster carer can be seriously out of pocket doing the school run & wear & tear on the car.”

“We normally advised how much pocket money to give the child. Some LA & IFA provide birthday & Xmas money. Others don’t. Some LA & IFA offer a holiday allowance & respite. Zero sick pay. Some pay a retainer when empty. Make sure you check this & get it in writing. You may have to fight for this. Some foster carers within same LA receive a room allowance whether have foster children or not & others don’t.”

“God help you if you get ill. Most couples who foster carers get 1 allowance. Use a specialist accountant who understands how foster care allowances work. Apply for your NI credits as a foster carer.”

“Had to end a placement because I was sick with Covid. No sick pay nothing. Did apply for the 500 Covid Government Grant thing. Initially told no because I work for the authority. Challenged this and said I’m supposed to be self-employed so I did get the grant. Everything seems an uphill battle if you want anything.”

“If a child arrives with few clothes or clothes damaged or doesn’t fit, keep all receipts for charges & shoes & ask LA to reimburse. Take photos of clothes & shoes that child came with. Show these to your SSW as a backup.”

“Mileage – 30 miles round trip for me before I can claim it, got to take it into account whether I can accept a child based on the distance of their school. Respite, I can look after someone else’s child and be paid less but vice versa also.”

“In-between placements if you want a break you have no income. As a single foster carer, this can be financially hard at times and you tend to never get a break.”

“It is hard when you want/need a break but then have no money, you can have a break and but not much money to do anything. You try to put a bit aside but often cannot. Things cost of living going up. Fees I think we’ve had one increase in ten years. We’ve also just been asked now to open bank accounts for the babies I think we have to put in about 6 a week. Does not sound a lot but all these bits and buying equipment etc it mounts up.”

“Holiday and Christmas payments are OK but not enough to cover a holiday abroad or be equal to peers at Xmas. We already have to save to top them up. I don’t know where they expect us to find money from sometimes.”

“I’ve just bought a new pram because I was embarrassed that my other one looked scruffy. Things don’t last forever. I’m not embarrassed but had to use klarna instalments. I believe you can get grants but I’ve never had any apart from money for a steriliser.”
“We can’t even get grants anymore either. They’ve been phasing them out for years. Clear pays my preferred for instalment payments but we shouldn’t have to use them.”

“In our LA the payments seem to be ok if you have settled placements which are the same each week but everything else is a nightmare, doing respite, going on respite, milage claims, training expenses, claiming for entire new wardrobes with placements that arrive in the clothes they stand up in, getting them to pay for their children’s damage, equipment, laptops, tablets, the list goes on, payments late or never and treated like pariahs.”

“Get an accountant if you go over the tax allowances, and many do by quite a lot, it is much cheaper than you think and you don’t lose any sleep”

“Never got any extra payments for birthdays or Christmas at the LA. Some agencies pay Birthday and Christmas or even an ice cream fund, a payment towards the child’s summer holiday however it is paid directly to us for the child and we end up getting taxed on it. I think it should be paid to the child’s bank account.”

“We don’t get paid badly for an LA, I mean it’s only £2.50 an hour for a child all told if you genuinely work it out, but not unhappy. We are level 3. But don’t get me started on staying put.”

“For those who do a diploma (used to be an NVQ) the LA give extra money a week for this skill level, the catch, you spend years trying to get your social worker to push it through and they keep moving the goalposts. Then have to do things we can’t physically do because of the placements we have to keep our ‘skills’ fee and they take it away without any serious investigation into what we do, think they are just trying to say ‘look what money we’ve just saved the LA’. However we are now leaving and moving to an agency because of their behaviour, being paid more and taking the kids with us, so it’s going to cost them far more in the long run. Just doesn’t seem to make sense.”

“In our LA you used to have to take your 2 weeks respite or lose it, but now they pay the two weeks if you don’t take the holiday. It’s very unfair that all the LAs differ in this.”

“They say you can claim benefits and foster but with any savings, it’s not always possible. I mean we don’t get a pension so you try and save for retirement or when you haven’t got a child in. I think the way they advertise this is very misleading. So many rules about claiming benefits.”

“We were told we had to replace our stair carpet (3 storey townhouse so it was hall, stairs, landing, stairs, landing) due to a small area where the cat had scratched, get safety film on our glass doors to the display cabinets, replace a back door that led to the secured garden and replace a double bed for bunk beds so we could accommodate a sibling pair, at our home assessment all before being approved. They have never mentioned if we could claim any monies back?”

“We were told we could have £20 to get pj’s and underwear for our placement who arrived with 1 T-shirt, joggers and the clothes on his back. We spent double that and more.”

“What with preparing a room for our preferred age range with all new toys etc, we then had to pack all away and age up the room! I daren’t add up all that we spent pre-approval.”

“Each time a child moves on you want/need to redo the bedroom which does cost us. When I did short term fostering I was forever changing beds or mattresses, toys repainting rooms, new bedding and carpet. It was expected, and every child should have a nice bedroom but cost us.”

“A child came to us unexpectedly and we would have got good quality second-hand goods, but it was during lockdowns so had no option but to buy new. I had a fellow foster carer offer new never worn clothes that still had the label on to help and when I mentioned it absentmindedly to my SSW she said ‘oh no they can’t have a second hand!”

“I’ve never received a “Birthday” payment, never received a “holiday payment” and I’ve never taken a holiday in 14 years, and when my current permanent young person goes to respite, not because I request it but because she wants it, I get two nights pay deducted to pay the other Foster carers. We are supposed to get two weeks retention pay if we have a placement over 6 months but I’ve never been paid this, ever.”

13. Information, Help and Support

Help and support created for foster carers, by foster carers, we are the experts by experience. We have the first foster carers knowledge bank.

Please find our help and support page here.

Access both the open pages and members area. Both are free to access and footprint-free. The member’s area gives you privileged confidential access to FosterWiki’s experts by experience for advice and guidance. You will also find short courses and guides from the foster carer’s perspective, top tips, allegation help, templates, and the ability to add to FosterWiki. With more content being uploaded regularly.

Please let us know what information or advice pages you would find useful and we will put them in place. https://fosterwiki.com/register/

14. Links

https://www.gov.uk/support-for-foster-parents/tax-arrangements
https://www.gov.uk/government/publications/qualifying-care-relief-foster-carers-adultplacement-carers-kinship-carers-and-staying-put-carers-hs236-self-assessment-helpsheet/hs236-qualifying-care-relief-foster-carers-adult-placement-carers-kinship-carers-and-staying-putcarers-2019
https://www.gov.uk/government/publications/national-insurance-credits-for-parents-and-carerscf411a?fbclid=IwAR1lbbpG-pH1FeoboIV88YgX0zpj1BaSKs4yQJSS8-9s5ukIbCGSAdiI3ok
England: https://www.gov.uk/support-for-foster-parents/help-with-the-cost-of-fostering
Wales: https://www.flintshirefostering.org.uk/en/PDFs/National-Minimum-Allowances-for-Foster-Carers-2020-2023-English-letter.pdf
Scotland: Scotland does not currently have national minimum allowances for foster carers, although the Scottish Government has committed to making recommendations in the near future. Read more about it here: https://www.thefosteringnetwork.org.uk/mfcf

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