Money Matters and Insurance

The Fostering Allowance relates to the Child or Young Person in placement and is an age-related allowance. This allowance is a maintenance payment provided to cover costs that include household, food, clothing, travel, self-care, and pocket money.

The Fostering Allowance will only be paid for the duration the Child or Young Person is in placement and is calculated on the exact number of nights the Child or Young Person was in the Foster Carers household. The payment is calculated in sevenths across the week.

The Fostering Allowance is not a fee and is not provided to supplement Foster Carers income.

The Fostering Fee relates to a payment to the Foster Carer for their skills and experience. The Fostering Fee is paid per placement.

Please note that Foster Carers are not eligible to receive child benefit for a fostered Child or Young Person and the Child or Young Person cannot be included in the foster family's claim for benefits or tax credits. Foster Carers in receipt of benefits should contact the benefits agency for advice where necessary or Fostering Network who can provide advice.

DLA is a benefit to help support children under 16 with care and mobility needs. Foster Carers who apply for DLA on behalf of the Child or Young Person must inform the Child or Young Person's Social Worker and the Supervising Social Worker of the application and receipt of benefit if such application is successful. Two rates of DLA can be claimed for the "lower rate" and "higher rate" and each has a care and mobility component.

Where a Child or Young Person is in receipt of DLA, this allowance should be spent on promoting the welfare of the Child and Young Person. How DLA will be spent should be discussed with the Child or Young Person's Social Worker and recorded as part of care planning for the Child or Young Person.

A record should be kept by Foster Carers of how the allowance is spent and this record should be available on the request of the Child or Young Person’s Social Worker or the Supervising Social Worker. 

The Supervising Social Worker will also discuss this with the Foster Carer within supervision visits.

When the Child or Young Person moves on from placement, any items purchased from DLA monies is their own property which they should take with them.

PIP is not a means-tested benefit and is not affected by earnings, other income or savings. It has two parts - daily living component for people who need help to take part in everyday life and mobility component for people who find it hard to get around.

This will need to be applied for prior to the Young Person turning 16.

The same principles apply as for DLA in respect of how the monies will be spent however it is recognised that Young People will have increasing input at this stage and might take responsibility for the spending of this. This will be discussed and agreed with the Young Person’s Social Worker.

An allowance is automatically paid to Foster Carers prior to the Child or Young Person’s birthday date. This is to enable Foster Carers to buy the Child or Young Person a present.

A fixed sum of money is automatically paid to Foster Carers in order to meet the extra cost of a gift to celebrate one special occasion per year.

This is also automatically paid to Foster Carers in order to meet the extra cost of celebrating one special occasion per year.

When a Child or Young Person is initially accommodated, it may be necessary to equip the Child or Young Person with appropriate clothing which will be discussed with the Supervising Social Worker and Fostering Support Team Manager.

Foster Carers have the ability to spread the purchase of clothing over a short period of time to take into account growth spurts or the changing seasons. There is an expectation that Foster Carers demonstrate proof of purchase or provide an estimate of costs to the Supervising Social Worker.

There is a percentage of money within the fostering allowance that takes account of wear, tear and growth, therefore Children and Young People should always be clothed to a very good standard.

Receipts are required for initial clothing allowances.

It is the expectation that all Children and Young People will be properly and reasonably dressed to attend school and participate in school-based activities.

Foster Carers are required to secure value for money by shopping wisely.

If the Child or Young Person changes school or needs to upgrade their uniform or activities, Foster Carers can make applications for further contributions based on an estimated cost of the item(s), however please note part of the fostering allowance covers the normal cost of clothing.

Receipts are required for school uniform grants.

Every Child or Young Person is entitled to an annual allowance, which can be used to take a Child or Young Person on holiday or may be spread over a period of time, for example summer holidays, day trips or special organised activities.

The annual allowance payable is double the weekly fostering allowance. It is paid upon an application to the Fostering Support Team Manager.

In the event of a Child or Young Person going on a school organised holiday or an agreed activity event, fees and fostering allowances will continue to be paid. However the fostering allowance will be used to offset the cost of the holiday or activity event.

If the cost of the school holiday or activity event exceeds the weekly fostering allowance, then the Foster Carer can make an application for an Exceptional Needs Grant to cover the difference between the cost of the holiday and the paid fostering allowance.

Application is made to the Fostering Support Team Manager.

Within the Child or Young Person’s Care Plan, there will be details of family time arrangements with the birth family or other significant persons.

Foster Carers are able to claim expenses incurred as a result of family time arrangements, for example telephone calls, mileage, rail or bus travel and, in some exceptional circumstances, meals or activities. These are subject to prior agreement with the Child or Young Person’s Social Worker or the Foster Carers Supervising Social Worker.

Foster Carer family time expenses forms should be submitted to the Supervising Social Worker on a monthly basis. For Connected Foster Carers any entitlements to family time expenses will have been discussed as part of the Placement Plan and Care Plan.

Foster Carers are entitled to claim up to a maximum of 60 hours per year babysitting costs. These 60 hours comprises 4 hours per month social evenings out for the Foster Carer, (i.e. 48 hours per year) plus 12 hours to attend Statutory Reviews and other necessary meetings. The allowances are paid at a fixed rate and must be claimed on an expenses claim form for fostered and own children.

Foster Carer babysitting claim forms should be submitted to the Supervising Social Worker on a monthly basis.

The Fostering Agency will reimburse carers who work and incur financial losses by attending a Fostering Agency Training Event, Court or meetings in relation to a Child or Young Person in placement (Babysitting and mileage expenses can also be claimed).

The Foster Carer needs to apply and produce a letter from their employer supporting that they have lost earnings due to their caring related activities.

The sum of money paid is a fixed sum per day and cannot be altered.

Every Foster Carer who transports Children and Young People in placement is required to have adequate car insurance in place.

Every Foster Carer is strongly advised to have household insurance, which takes account of the Foster Carers fostering activities (the insurance company would need to be informed you foster). Foster Carers should also have some form of third party liability, usually covered under the household policy. Not informing the insurance company that you foster might result in the insurer rejecting a claim when they find out the policy holder is a Foster Carer and has not declared this dependent on the nature of the claim.

In the event of a Foster Carer incurring extra expenditure on the insurance policy as a result of the Fostering Task, the Fostering Agency will pay the difference of expenditure. The Fostering Agency will pay the difference between the old sum of money for insurance cover and the new cost of cover on production of documentation. This will be reviewed on an annual basis.

Foster Carers who have approval from Birmingham Children’s Trust Children’s Services to take Children and Young People in placement abroad must have holiday insurance to cover a wide range liabilities including health, damage, delays in travel, etc.

There are occasions when the primary Foster Carer falls ill and is not able to look after the Child or Young Person/Children or Young People in placement. On production of medical certificate fees will be paid for 2 weeks following consultation with the Fostering Support Team Manager. The Fostering Head of Service may at their discretion extend payment of fees for a further period of up to 2 weeks on receiving a written report by the Supervising Social Worker, countersigned by the Fostering Support Team Manager.

When an allegation is made against a Foster Carer, the Foster Carer may be placed on hold without prejudice. This is to allow investigations to be undertaken as quickly as possible. Any Child or Young Person in placement may also be moved to an alternative Foster Carer.

When this decision is made, the Foster Carers Fees will only be paid for a maximum of 4 weeks. After the 4-week period, the decision to continue the decision and payment of fees will be reviewed by the Fostering Head of Service/Assistant Head of Service (Registered Manager). Depending on the nature of the allegation, the process of investigation and the evidence gathered, the Review may decide to continue with the payment of fees for a further 4 weeks or alternatively end all fees.

After the 4-week extension all fees will end.

No fostering allowances will be paid during the period of the placement being placed on hold.

In exceptional circumstances, the Fostering Agency will consider providing funding to enable Foster Carers to extend their fostering activities. Application and authorisations of payments is the subject of specific terms and conditions and depending on the sum of money required.

There is a fixed budget for Ex Gratia payments. The Fostering Agency, therefore, has to prioritise applications according to identified need. For further information on Ex Gratia Payments, consult your Supervising Social Worker or the Fostering Support Team Manager.

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.

On top of this exemption, you also get tax relief for every week (or part week) that a child is in your care.

All payments made to you will be itemised. You should keep this information as a record for income tax purposes.

For further information and current figures, please see: Foster Carers Relief Information (HMRC) and Help and Support for Foster Parents in England.