Money Matters and Insurance
Once you have been approved as a Newham foster carer, we will give you a one-off payment called a setting up grant. This sum of money is to be used for furniture, bedding or equipment for the child (ren) who will be coming to live with you.
All payments are made directly into your bank or building society account, and are made fortnightly on the basis of one week in arrears and one week in advance.
All carers including connected persons foster carers, short and long term carers, receive the same child’s allowance. The child’s allowance is designed to cover the full cost of caring for the child or young person in placement. This includes:
- Food;
- Clothing (including school uniform);
- Pocket money;
- Savings;
- Household expenditure (percentage towards gas, electricity bills etc);
- Wear and tear on household furniture, carpets and accessories;
- Activities (attending clubs and hobbies);
- School activities.
We want our foster carers to encourage the children and young people they are caring for to become used to handling money. So each child will receive weekly pocket money to the encourage them to become ‘money minded’.
In the case of payment errors, you should contact your supervising social worker to rectify any problems immediately.
You will receive a copy of the current year’s allowances when you are first approved and when the fostering allowances are updated.
Foster carers may incur additional costs when caring for a child. Below are examples of additional costs.
Support packages
Where it is identified that there are specific needs and costs relating to the care of the child, a support package may be identified.
Travel costs (to be claimed via the supervising social worker)
In exceptional circumstances an extra allowance can be paid for travel costs incurred by the carer that are over and above the normal amount expected. All carers will incur travel costs in transporting children to school, to contact visits and to special meetings, and an element of the fostering allowance is paid to cover this expenditure. In exceptional circumstances, for special travel outside of the London area for example, mileage can be claimed or other fares reimbursed.
Babysitting
All foster carers attend training sessions throughout the year and we expect carers to use their support network of family and friends, or other carers, to babysit for them whilst they are attending training sessions.
Only in exceptional circumstances are babysitting fees paid.
Respite care
If you are a long term carer matched with a specific child and are requiring respite care, throughout the period of respite, you will continue to be paid your reward fee element of the fostering allowance, up to two weeks.
Carers who are providing respite care, will receive the full allowance as with any other placement.
Other duties (to be claimed via your supervising social worker):
In some circumstances foster carers may be asked to undertake tasks that are beyond their normal role as a carer for children and young people. For example they might be asked to attend a recruitment event or a preparation for fostering group. Carers can claim for this work at an hourly rate of £10 per hour.
In addition to weekly child allowances, all approved foster carers receive a reward element for themselves. This is called the foster carers’ fee and this payment is based on a foster carer’s competency and is paid per child for however long the child is in placement.
There are two levels of payment depending on the carer’s competency and experience. Newly approved carers will start on level one. Once a foster carer has completed their Training, Support and Development Standards portfolio, they will progress to the second level.
While you don’t need to have specialist home insurance to be a foster carer, most fostering services will expect you to advise your insurance company of your fostering role (check your fostering service's handbook) and we strongly recommend that you speak to potential insurers about your occupation to ensure you’re not exposed to any unnecessary risk. We’ve pulled together this guide, with the support of our partner Towergate Insurance, to give you some more insight into what you need to think about and the questions you need to ask regarding home insurance to ensure you are adequately protected.
- I am a foster carer, do you apply any additional restrictions, reductions or exclusions to my policy?
- Do you cover my foster children’s possessions as contents of my home? Are there any non-standard restrictions, reductions or exclusions to this?
- Would you provide cover for any accidental damage caused to my buildings and contents by a foster child in my care?
- Would you provide cover for any intentional or malicious damage caused by a foster child in my care? If yes, what would I be required to provide as evidence to support my claim submission?
- Do you require me to let you know as and when I accept new placements or foster children leave my care? If so, what information would you need me to provide and how quickly could you confirm if cover is available?
- If a foster child has a criminal background or a background of causing damage, do I need to disclose this to you?
- Do you have a cap on how many foster children I can have in my care at any one time?
- What is your claims process for dealing with foster carer home insurance claims?
- Do you have a team that understands my role as a foster carer? Do you understand that I will have occupation-related visitors to my home regularly, such as social workers?
- Am I able to get specific foster home insurance advice at any stage during my policy period?
Why you should ask these questions
As a foster carer, in the eyes of an insurer, you may also be using your home as a business premises. This is why it is very important that you speak to any potential insurers to really understand what you are and are not covered for.
With standard home insurance, it may not be enough just to tell your insurer you are a foster carer. While it may not make any difference to your policy or premium, and they may note it on your policy that this is your occupation, it could be that you find you are not covered for things you assume you would be. Some specific things to think about are:
- Fostered children’s possessions - This may seem to you like a standard part of being a foster carer, but you need to make sure that any insurer considers your foster children’s possessions to be contents of your home. If not, and there is any loss or accidental damage to any of their belongings, your insurer may not pay out.
- Intentional Damage - You may well have fostered children in your care from time to time who have experienced distressing situations that means they show signs of anger; resulting in them damaging or stealing your property or contents. If your insurer deems foster children simply to be part of your family, this would likely mean that any damage they cause intentionally, rather than accidentally, and any theft or attempted theft would not be covered under your policy, so you may find yourself out of pocket.
- Claim requirements - If an insurer can extend your policy to include an element of intentional damage and theft cover, you should also check with them what the requirements would be to claim under this section of the policy. It may be that you would need to obtain a crime reference number for any incidents of this nature in order to progress the claim. We understand that adding to a criminal record for your foster children is likely the last thing you want to do, so it is worth asking this question to ensure this is cover you would be able, and comfortable, claiming on. There are specialist providers who can offer policies where there is no need to obtain crime reference numbers for claims of this nature to be processed.
- Awareness of your role and what it entails - It is unlikely that a standard home insurance provider would really understand what it means to be a foster carer and the processes that you follow to accept new placements. It may be that an insurer understands that you are a foster carer, but that as a condition of the policy, they require you to notify them of any new placements you are considering accepting and whether they have a criminal background or a history of causing damage.
What if I don’t think standard home insurance is right for me?
Some home insurers will cover you for all children in your care at all times regardless of background, with no need to notify them as and when you accept new placements or when foster children move on. In addition, it is important that insurers are aware that it is a standard requirement for foster carers to receive occupation-related visitors to the property, such as social workers, and to ensure this is not going to have an impact on your cover. If you don't have specialist home insurance it would be sensible to check with your fostering service as to how they would reimburse you for situations which may not be covered under a standard home insurance policy.
There are specialist providers of home insurance for foster carers, including our partner Towergate Insurance. They have designed a policy that takes all of the above into consideration and have a dedicated team to deal with enquiries from our members. They also offer discounts and other promotions for members of The Fostering Network so, if you are a member, don’t forget to tell them.
- All Risks insurance cover in respect of property (comprising buildings and contents but excluding computer equipment and motor vehicles) belonging to foster carers registered with the council. Limit of indemnity £50,000 with an applicable excess of £100. This applies to damage/loss that has been proven to have been caused by the foster child.
- Money belonging to foster carers registered with the council. Limit any one family to £1,000.
- Additionally, under the terms of their membership of the Fostering Network, foster carers are covered for legal liability and expenses of any claim for damages made against a foster carer in the course of their duties. For more information about legal expenses insurance, please call Fostering Network or sign in for access to 24 hour support.
- Public liability claims - where a claim is received from a third party relating to an injury or loss of or damage to property, or an accident to a third party occurs where a claim could arise, a report – together with the correspondence and/or claim form received from the claimant, must be forwarded to the Insurance Section, Newham Dockside, 1000 Dockside Road, London. E16 2QU. The courts now impose strict time limits for dealing with claims in accordance with set procedures that are in force. Failure to comply could result in severe financial penalties being set by the court.
As a foster carer you may be entitled to claim benefits and tax credits. The allowances and fee (if you get one) you receive from fostering are normally completely disregarded as income or only taxable profit from your fostering is taken into consideration for the purposes of calculating your entitlement to benefits.
This is a benefit to which some people are entitled if they are unemployed and have paid a sufficient number of National Insurance Contributions. However, to receive it, the Job Centre Plus will need to be convinced that the applicant is available for work. Being a foster carer inevitably restricts this availability. If the carer has a partner who is unemployed, he/she can apply for both adults; a single carer, who is caring for a child under 16, should consider claiming Income Support instead.
Housing Benefit is for people who pay rent. You must have a low income and savings of less than £16,000 to qualify for this benefit.These benefits can be claimed whether or not a carer is working and the amount due will depend on income. Fostering income is disregarded.
There are two types of Tax Credits – Working Tax Credit and Child Tax Credit.
As a foster carer on a low income you may be able to claim one or both depending on your circumstances. They are non-taxable.
Child Tax Credit
- Child Tax Credit - is paid to you if you are responsible for a child or young person who normally lives with you. Foster carers cannot claim Child Tax Credit for any fostered child they are caring for because they are provided with a fostering allowance which must cover the full cost of caring for each child placed with them. If a foster carer finds out they are getting Child Tax Credit for a foster child we would advise them to not spend the money, keep it to one side and alert HMRC.
- Working Tax Credit - is to top up the earnings of low paid workers and so is based on the hours you work and get paid for. HMRC regard fostering as ‘work’ (as foster carers are required to be registered as self-employed) so foster carers are eligible to claim Working Tax Credit.
Income Support is a non-taxable benefit. You could get Income Support if you, and your partner if you have one, are not in full time employment (this is 16 or more hours per week for you and 24 or more hours for your partner). You must also fall into a category of people who do not have to look for work.
This benefit is means tested and only those families without sufficient other income are entitled to it. This means that if a carer has a partner, any income he/she has will be taken into account. Fostering is not counted as work and fostering allowances are disregarded in calculating entitlement. Single foster carers looking after at least one child under 16 can claim Income Support while the child is in placement, although they may be required to sign on and claim Jobseeker’s Allowance, if there is no child in placement. This differs from the situation with birth children where only single parents with children under 7 (and under 5 from October 2011) are able to claim Income Support; others must claim income-based Jobseeker’s Allowance and sign on as available for work.
This is replacing Incapacity Benefit for those people judged unfit to work; it is not means-tested and again eligibility relies on the payment of a certain amount of National Insurance Contributions. Fostering is not classed as work under this scheme and any payments for this are disregarded. However, claimants are likely to be expected to participate in activities designed to help them find work.
Universal Credit is part of the Government’s major welfare reform plans. Universal Credit is being phased in over a number of years and aims to simplify the current benefit and tax credits system. Universal Credit is a means-tested benefit for working age people who are on a low income. In time it will replace six existing benefits/tax credits with a single monthly payment. Universal Credit will eventually replace:
- Income-based Jobseeker’s Allowance;
- Income-related Employment and Support Allowance;
- Income Support;
- Working Tax Credit;
- Child Tax Credit;
- Housing Benefit.
New claims to existing benefits, which Universal Credit is replacing, will then close down, with the vast majority of claimants moving onto Universal Credit during 2016 and 2017. If you are already receiving these benefits or tax credits, they will continue to be paid until you are moved onto Universal Credit.
Disability Living Allowance (DLA) is a benefit paid to children and young people under 16 years who have care or mobility needs as a result of a disability or ill-health, and is paid on top of any other benefits, tax credits or income you may have. DLA is ending for people who were born after 8 April 1948 and are 16 or over and is being replaced by Personal Independence Payment (PIP). This is a similar benefit but is based on a different type of assessment. It is based on two components – daily living component and mobility component. Children getting DLA who reach 16 will be reassessed for either DLA or PIP depending on which part of the UK they live, although eventually all DLA claimants will be reassessed for PIP.
Council Tax Reduction
Council Tax Benefit was replaced with Council Tax Reduction (sometimes called Council Tax Support) in April 2013. Each local authority is required to have set out how they will support vulnerable groups with payment of Council Tax. Foster carers will need to contact their local authority to find out if and how they support foster carers with Council Tax. You could be eligible if you’re on a low income or claim benefits. Your bill could be reduced by up to 100%. You can apply if you own your home, rent, are unemployed or working. What you get depends on where you live - each council runs its own scheme, your circumstances (eg income, number of children, benefits, residency status), your household income - this includes savings, pensions and your partner’s income (check how they will treat your fostering payments), if your children live with you and if other adults live with you.
Council Tax Reduction does not apply in Northern Ireland, where a system of rates is in place.
For more information about your entitlement to benefits please refer to the HMRC Website.
Last Updated: August 13, 2024
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