What Are the Financial Implications of Fostering a Child?

*This is a collaborative post on the financial implications of fostering a child

Fostering a child can be a wonderful thing to do, providing them with a safe and comforting home and support system. In this article, we talk about what are the financial implications of fostering a child.

While fostering can be an amazing thing to do, it is important to consider whether it is financially feasible for you to take care of a child. That’s why we’re here to discuss the allowance foster parents receive, how it financially affects foster carers and the type of benefits they are entitled to.

With this in mind, if you make the decision to adopt a child, it’s worth seeking the assistance of a family law solicitor, who can provide specialist advice during the entire fostering process. This can include providing expert advice on the benefits and limitations, such as the financial implications.

To learn more about the financial implications of fostering a child, keep reading…

How Can Fostering Financially Impact You?

Implications on Your Benefit Allowance

If you are eligible to receive benefits but are also a foster carer and receive a carers weekly allowance, this can implement the amount you are entitled to. To work out what you are entitled to, see the GOV.UK benefits calculator.

Implications to Your Tax

When individuals become foster parents, HMRC classes them as self-employed, meaning they have a responsibility to register as self-employed and file a tax return each year.

Fostering provides a tax relief known as the Qualifying Care Relief tax scheme. What this means is any allowance received per household which is valued under £10,000 has a tax exemption. There is also the possibility that you can receive tax relief for allowance received above £10,000 due to there being tax relief for every week you foster a child. This tax relief is £200 a week for any children under the age of 11 and £250 a week for any children aged 11 or over.

What this means is that in most instances, foster carers will not have to pay any tax when fostering a child, or if they do, it will be a small amount.

Fosterplus provides some helpful information on foster care tax relief.

The Cost to Bring up a Child

The important thing to note when fostering a child is the cost of raising a child. Children can be expensive. There are lots of costs involved that many people forget to consider, including uniform, stationery, textbooks, household spending, interests and hobbies, clothes, food and more.

In 2019, the Child Poverty Action Group (CAPG) did a report to determine the average price of raising a child from birth to the age of 18. The report found on average, a couple would spend £151,000, and a single parent would pay £185,000.

What Benefits Do Foster Carers Receive?

Being a foster parent can impose a number of benefits. For example, fosterers can claim the following:

• Income support
• Council tax reduction
• Income-based job seeker’s allowance
• Disability living allowance
• Working tax credits
• Housing benefit

Do Foster Parents Receive an Allowance?

When you foster a child, you will also be entitled to a weekly allowance, which is paid for via the Local Authorities. This allowance is to cover the cost of caring for the child, such as buying them clothes, feeding them, etc. How much you are entitled to receive depends on certain factors. It can be between £137 and £240 a week. These factors include:

• Where you reside
• The type of foster service you use
• The age of the child
• Whether the child has any specific needs
• Your fostering skills and expertise

If an independent fostering agency is used, foster carers are often paid a significant amount more. Capstone foster care provides examples of what you could receive, such as:

• Therapeutic foster placements – approx. £500 – £600 per week
• Parent and child placements – approx. £650 per week
• Standard placements – approx. £400 per week
• Respite placements – approx. £400 per week

These weekly payments include both an allowance to cover the costs of caring for the child in addition to an income rewarding you for the time spent looking after them.

Fostering a Child Can Be Financially Beneficial

What we can conclude from this article is that while fostering can be fantastic for many reasons, such as providing a caring home to a child in need, it also rewards you financially, with practically little financial implications to foster carers due to the allowance they receive.

Before jumping into becoming a foster carer, it is worth estimating the allowance amount you will receive and how much it is likely to cost you to care for a foster child.

Do you foster children? How has it financially impacted you? Let us know in the comment box below.

Please be advised that this article is for general informational purposes only, and should not be used as a substitute for advice from a trained legal professional. Be sure to consult a family lawyer/solicitor if you’re seeking advice on the law. We are not liable for risks or issues associated with using or acting upon the information on this site.