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Fostering Allowance

Lotus provide foster carers a competitive fostering allowance for every child living in your home. This includes both the professional fee paid to you as a foster carer and the child’s living allowance. You’ll begin receiving your fostering allowance as soon as a child is placed in your care. The amount you’ll receive varies but will cover expenses including maintenance, clothing, pocket money, leisure activities, and travel expenses.

Our foster carers receive a foster care allowance from £420 to £650 per week, depending on the age of the child and the type of placement. This may be higher in some circumstances.

Tax Exemption

HMRC provides a fixed tax exemption of up to £10,000 per year (or less if you foster for a shorter period). This tax exemption is shared equally between all foster carers in the same household. This tax exemption means you won’t pay tax on the first £10,000 you earn from fostering.

Tax Relief

You will also benefit from a weekly tax relief while you have a child placed in your care. This tax relief is on top of the £10,000 tax exemption meaning you won’t have to pay tax on some of your earnings over £10,000.

The weekly amount of tax relief is dependent on the age of the foster child in your care:

For each child under the age of 11 in your care, you will benefit from a tax relief of £200 each week.

For each child aged 11 or over in your care, you will benefit from a tax relief of £250 each week.

The below foster carer allowance examples will give you an idea of how the tax allowances work. All examples are for illustrative purposes only and are based on a 52 week placement. The actual amount you will receive may vary from the example

  • Example 1
  • Simon fosters full time, a 15-year-old boy on a long term so has cared for him for a full tax year.
  • £21,000
  • Tax relief = £10,000
  • Tax Exemption – 52 weeks at £250 = £13,000
  • Total Tax Threshold = £23,000
  • Simon’s Total Fostering Allowance = £22,000
  • How Much Income Simon Pays Tax On = £0
  • Simon receives a fostering allowance of £21,000 and will pay no tax.
  • Example 2
  • Amy fosters a 13-year-old girl for a full year but then has a 7-year-old placed with her for 14 weeks.
  • £28,000
  • Tax relief = £10,000
  • Tax Exemption – 52 weeks at £250 = £13,000
  • Tax Exemption – 14 weeks at £200 = £2,800
  • Total Tax Threshold= £25,800
  • Amy's Total Fostering Allowance = £28,000
  • How Much Income Amy Pays Tax On = £2,200
  • Amy receives a fostering allowance of £28,000. She will need to pay tax on £2,200 of her income.

Tax depends on your personal circumstances and other sources of income, but with expert tax advice from Foster Talk, this will be simple to calculate. Foster Talk’s tax accountants can even manage your tax return on request for a small administration fee.

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