Money Matters and Insurance
This chapter should be read alongside the Payments to Foster Carers Policy.
For information about the current allowances and fees paid by Foster for Bradford, please read: Current Foster Carer Payments.
Contents
- Introduction
- Payments to Carers
- Other Allowances
- Holiday Allowance
- Festival Allowances
- Birthday Allowance
- Educational (not Recreational) School Trips
- Travel Expenses
- Equipment
- Additional Clothing Allowance
- Pocket Money
- Passports and Documents
- Income Tax
- National Insurance
- Claiming Benefits While Fostering
- Pensions
- Receipts
- Insurance
1. Introduction
The following principles underpin the Bradford Children and Families Trust Fostering Service payment scheme:
- It is designed to be simple, fair and easy to understand;
- It allows Bradford Children and Families Trust to be competitive with local independent fostering agencies and other local authorities;
- It recognises and rewards the complex task of fostering other people’s children; and
- The care payment meets the Department for Education’s national minimum fostering allowance.
The fostering allowance essentially covers all the day to day costs of caring for a child. This makes us compatible with all-inclusive payments schemes run by independent agencies. There is an expectation that you will budget and manage your money as you do for your own family. The fostering allowance rate is subject to annual review.
Payments are made up of three elements:
- The first element is the basic age related child allowance known as the maintenance allowance; and
- The second is the professional fee. This is often referred to as the skills payment and is paid to recognise foster carers’ time, skills, training and experience;
- Additional allowances include birthday, holiday and festival allowances. Other allowances are paid on a case by case basis. Details of these are below.
All three payment elements are available to all foster carers.
If you have any queries about allowances or if you think you have been under or over paid, contact the fostering business support finance team via email Fostering.AdminTeam@bradford.gov.uk or via the automated switchboard 01274 434 444 as soon as possible.
Payments to you are made every two weeks, direct to your bank or building society.
2. Payments to Carers
Maintenance allowance
The maintenance allowance is paid to all foster carers to cover the day-to-day expenses involved in looking after a child in care. This payment reflects the fact that high quality foster care is crucial in order to achieve better outcomes for children and young people and increased placement stability. The amount paid as a maintenance allowance is guided by the Government through the Department for Education (DfE), which publishes guidance every year on what the weekly maintenance allowance should be. DfE rates are based on the cost of living and are expected to cover the cost of caring for a child or young person in care. Details about what is included in the maintenance allowance payment can be found further on in this section.
Payments are made on a fortnightly basis, directly into your bank account. You should notify your supervising social worker (SSW) and the finance admin team (email Fostering.AdminTeam@bradford.gov.uk) of any unplanned placement moves of your foster child to ensure that overpayments are minimised. Whilst payments will be adjusted, it is obviously in everyone’s interests to reduce the need for this.
N.B. Please be aware that the Council always seeks re-imbursement of any money that we have overpaid, which can include asking a debt collection company to follow up the outstanding amount. Equally, if you think you are being underpaid, it is important that you let us know so we can correct it.
If you need to speak to someone about your payments or have queries relating to forms, dates and placement details etc, please email Fostering.AdminTeam@bradford.gov.uk or speak to your supervising social worker.
2.1 Fostering maintenance allowances
Fostering maintenance allowances are paid based on the age of the child and include money for clothing and day to day living; food, heating, normal transport to school, school activities, toiletries, hair/skin care and school dinners.
2.2 Professional fees
Unlike the DfE recommended maintenance allowances, professional fees are not paid dependent on the age of the child. They are paid across age bands. The full fee is paid for the first child and an extra 50% is paid for each subsequent child.
The professional fee is a payment based upon a tiered professional development programme, which allows carers to move between the tiers. Payments are made to foster carers depending on their progression, which is measured against the competency framework (see: Current Foster Carer Payments).
2.3 Daily maintenance allowances and professional fees for part-time foster carers providing short break placements
Part-time foster carers receive daily rates, which are pro-rata of the weekly fee (at 1/7th of the weekly fee) and the weekly allowance (set at 74% of the weekly allowance as the clothing element of the allowance has been removed) when a child is staying with them.
2.4 Additional payments to carers
These payments include:
- Up to 28 days’ holiday pay per annum (skills payment only);
- Up to 12 weeks’ paid retainer payment set at the foster carers skills fee level once a child has left the fostering household. However, if no children are placed within the first 6 week period the retainer is reduced by 50%. If no child is placed within a further 6 week period the retainer payment is ceased.
3. Other Allowances
While a child is in foster care, they are entitled to a number of other allowances.
The level of these payments is reviewed once a year. Please check the Fees and Allowances document in the Foster Carer Payments section.
The other allowances include:
- An initial clothing grant if applicable to a child’s situation when arriving in the foster carer’s household;
- Life story work payment, which will need to be agreed by the child’s social worker;
- A discretionary leaving grant for young people who are leaving a fostering household and setting up their own household. Please discuss with the Leaving Care team worker / manager involved.
4. Holiday Allowance
The holiday allowance is paid once a year in June. The amount paid depends on the age of the young person in placement and is the equivalent of two weeks’ allowance.
5. Festival Allowances
The religious festival allowance is paid in November and is the equivalent of one week’s allowance.
6. Birthday Allowance
This should be made with the payment immediately before the date of the child's birthday and is the equivalent of one week’s allowance.
7. Educational (not Recreational School) Trips
The fostering service will pay for a maximum of two educational (not recreational) school trips abroad for Children in Care aged between the age of 9 and 16.
These must have been discussed with your supervising social worker and agreed by the child’s social worker. Agreement for payment of the trip (up to maximum amount of £800) must be authorised by the fostering team manager.
8. Travel Expenses
The weekly allowance we pay to foster carers includes an element for travel. We expect that you will budget from the child’s allowance to cover any normal travel costs such as going to and from school, family time and leisure activities.
We do not pay for trips to the doctors / dentists, parties, shopping or days out. Only exceptional travel expenses will be paid for by the fostering service. This will be at a set rate per mile, minus the mileage amount from the weekly allowance. Exceptional claims may be for excessive mileage linked to a child’s Care Plan. If you think you need to make an exceptional mileage claim, you should explain your situation to your supervising social worker, submit a Claim Form A with your recorded mileage and petrol / diesel VAT receipts. Your supervising social worker will then present your claim to their team manager for agreement and approval.
Any exceptional mileage claims need to be claimed within 3 months of the date of the journey. All claims must be supported by receipts and you must send these in regularly along with a Claim Form A.
9. Equipment
On approval, the fostering service will provide you with the basic / essential equipment necessary to care for children within your preferred age range. Your supervising social worker will help you work out what you need and what the service will provide.
Any damages to the equipment made by the children in your care should be claimed for via your insurance policy.
All purchases must be made through your supervising social worker.
Children with disabilities may also be provided with more specialist equipment; discuss this with your supervising social worker. Some items may be provided by the NHS.
10. Additional Clothing Allowance
If a child arrives on an emergency placement, you may need extra money to buy clothes. Please discuss this with your supervising social worker.
School uniforms should be budgeted for out of the weekly allowance that you receive.
11. Pocket Money
Bradford Children and Families Trust expects that all Children in care will receive pocket money. The amount of pocket money that carers give should be realistic depending on the age of the child.
There should be some level of equality between all children in the fostering household – both fostered and birth children.
Children can be encouraged to save their pocket money to buy special items as well as for treats such as sweets or computer games.
When the child is old enough, carers should open a cash card account at their local bank or building society to encourage children to manage their pocket money. These can usually be opened from the age of 11.
Carers should make regular payments in to a savings account for each Child in care.
12. Passports and Documents
Children in care will have the cost of getting their birth certificates (and copies), passports and life story books met by Children’s Services. Please speak to your child’s social worker about this.
Information is also available from the GOV.UK website about passports.
13. Income Tax
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:
Tax exemption
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.
Tax relief
On top of this exemption, you also get tax relief for every week (or part week) that a child is in your care.
For further information and current figures, please see: Foster Carers Relief Information (HMRC) and Help and Support for Foster Parents in England.
If your payments for fostering exceed the above amounts, you may choose either to pay tax on actual profits or on gross receipts minus the ‘qualifying amount’. The ‘qualifying amount’ is made up of a fixed amount and an amount per week for each child placed as detailed above. These amounts change from year to year depending on your placements.
Foster carers who receive payments for fostering (above the reimbursement of costs) are considered to be self-employed for tax purposes. Every foster carer needs to register as self-employed with His Majesty’s Revenues & Customs as soon as you receive any payments for fostering. You can be fined if you do not do this.
Any sessional payments that are paid to foster carers who are members of the fostering panel or are trainers or which they receive for providing day care are taxable.
BIFCA (Bradford Independent Foster Carers Association) runs free tax workshops to help you fill in your self-assessment form if needed. Dates for these workshops will be sent out to you in the fostering e-newsletter.
The Fostering Network provides you (as a member) with advice and support around fostering finances, including free webinars, a tax video about issues such as Qualifying Care Relief, calculating your taxable profit, registering with HMRC and more, as well as answering frequently asked questions. The Fostering Network also work with accountants, Xeinadin for tailor-made fixed fee tax return service. For more information, please see: The Fostering Network website.
See also: Foster Carers Relief Information (HMRC).
14. National Insurance
As a foster carer, you need to register as self-employed with HMRC even if you don’t see yourself as being self-employed. HMRC may tell you that you ought to be paying class 2 NI contributions. These count for:
- Employment and Support Allowance (for periods of illness)
- Basic state pension
- Maternity payments
- Bereavements benefits.
You may be excused from paying these contributions if your profits from fostering are less than £6,725 (2023-24) (£6,515 in 2022-23). You can still maintain a basic NI record if you apply for Credits for Parents and Carers. These are free NI credits which count towards:
- State pension
- State second pension and
- Bereavement benefits.
These credits replaced Home Responsibilities Protection (HRP) in 2010. You can get these credits for each week you are a foster carer. Apply on form CF411A. You can apply retrospectively for past years too, including HRP from 2003 up to 2010, if you have any missing contributions.
Further information about tax and national insurance is available from HM Revenue and Customs:
- HMRC's online forum for self-employed people;
- HMRC webinar for self-employed people. Usually every month HMRC hold a ‘webinar’ (a ‘live’ presentation you can watch and participate through your computer). More information and how to register can be found here (scroll down to ‘foster carers’);
- HMRC's help-sheet 236: A helpsheet explaining qualifying care relief, the tax scheme for foster carers. You can also go to the www.gov.uk and type HS236 in the search box;
- HMRC webinar for foster carers’ tax returns: A webinar explaining how to complete a tax return form.
15
Claiming Benefits While Fostering
You can apply for Universal Credit if you are fostering. Your fostering allowance is not included in your assessment.
Since 20 June 2018, Universal Credit has replaced (for new claimants and for existing claimants whose circumstances change) the following six legacy (means-tested) benefits, with a single-monthly payment:
- Jobseeker’s Allowance;
- Employment & Support Allowance;
- Income Support;
- Working Tax Credit;
- Child Tax Credit;
- Housing Benefit.
More information is available on line at:
Web: www.understandinguniversalcredit.gov.uk/
Other benefits you may be able to claim (of working age or not):
- Pension Credit
If you or your partner have reached the qualifying age for state pension for women;
- Council Tax Reduction
If you pay council tax, it may be worthwhile claiming this benefit if you are on a low income. Your fostering allowance is disregarded as income. Even if you are claiming Universal Credit, you could still claim Council Tax Reduction from the Council;
- Disability Living Allowance (DLA)
You may be able to claim DLA for a disabled child you are fostering if they need a lot more looking after than a child of the same age who is not disabled, or if they have difficulty getting round. Get advice;
- If you have a health problem yourself
You may be able to claim a benefit for yourself. Take advice;
- Carer’s Allowance
You can claim Carer’s Allowance for caring for anyone, including a foster child, who gets middle or highest rate care component of DLA. Your fostering allowance is not counted as earnings. Claiming Carer’s Allowance can help you get Universal Credit, Pension Credit, Jobseeker’s Allowance, Housing Benefit and Council Tax Reduction. If you get one of these benefits, ask for a benefit check before you claim.
Advice and help
If your benefits or tax credits stop, get advice as soon as possible.
Citizens Advice Bradford & Airedale and Bradford Law Centre gives free advice to people in the Bradford District (including Shipley and Keighley).
Call: 03442 451282
Email: admin@bradfordcab.com
Web: www.citizensadvice.org.uk/local/bradford-airedale/
You can also speak to the Fostering Network on their free advice line for help and support dealing with your finances while you foster. Call: 020 7401 9582 or email info@fostering.net
16. Pensions
If you foster, you may be eligible for National Insurance Credits which count towards your State Pension.
Foster carers are potentially liable to Class 2 National Insurance Contributions at a fixed weekly rate and Class 4 National Insurance Contributions which are profit based charges.
17. Receipts
You should keep a record of how the allowance is being spent on a child/young person. You should keep receipts where possible. The child/young person should sign for money they are given e.g. pocket money and clothing allowance. This helps build a record of what has been spent, which you can show if asked about it at a later date.
18. Insurance
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 given to your supervising social worker.
The Fostering Network provides information about insuring your home and car on their website.
