Fostering Allowances cover the cost of looking after a foster child and gives recognition to the work that carers do as part of the task of fostering.
The foster care allowance is made up of two elements: an allowance for the care of the child and a fee for the task/skills you need to have or to support the development of these skills.
Currently the allowance for the care of the child is tax-free and the fee is taxable, but both should be declared.
Once approved you will receive a Foster Care Handbook with all allowances broken down further and also membership to the Fostering Network which will send leaflets to you about tax and other financial information.
The Inland Revenue must be informed of all payments made to carers and an annual statement is sent to each foster carer by Mulberry Foster Care. It is the responsibility of the foster carer to ensure that they are registered as self-employed with the Inland Revenue and to meet their responsibility for any National Insurance contributions. It is also the responsibility of the carer to ensure that they complete an annual tax assessment, if required.
NB Allowances are not ‘pay’ and would not normally affect any benefits received by the foster carer. Being on benefits does not prevent you from fostering.