e-petition debate on allowances and tax arrangements for foster carers

E-petition 625515 calls on the Government “to review and increase allowances paid to foster carers, and also tax exemption levels for foster carers, so they reflect the true cost of caring for a child.” It adds that the number of foster carers is declining and that “the cost of living crisis is worsening the situation.”

Allowances for foster carers

Local authority foster parents are entitled to an allowance to cover the cost of caring for foster children in their home. Allowances are set at a local level and can vary by location, and according to the age and needs of the child.

Each government of the UK sets its own minimum allowances for foster carers. Details of the minimum allowances in each country of the UK are available on the website of the Fostering Network charity at: Fostering allowances.

For 2023/24, the national minimum allowances increased by 12.43% in England, 5.5% in Wales and 3% in Northern Ireland. National minimum allowances were introduced in Scotland for the first time in 2023/24.

The Fostering Network has raised concerns that the current system is “creating disparity for children in foster care” and some children “are not being provided with sufficient funding to achieve a minimum standard of living.”

Tax relief for foster carers

Foster carers across the UK may claim “qualifying care relief” on payments they receive when they have children or adults placed with them by a local authority, health and social care trusts (in Northern Ireland), a fostering service provider, or a shared lives service provider. The amount of tax relief is made up of two parts: a fixed amount for each household for a full year, and a weekly amount for each cared-for child or adult. These provisions are UK-wide.

When qualifying care relief was introduced in 2003, the amount of tax relief that could be claimed was set at:

• £10,000 for each household for a full year; and
• an additional weekly amount of £200 for a child aged under eleven, and £250 for a child aged eleven or over.

These limits remained unchanged up to 2023, but at the Spring Budget 2023 the Government announced that from 6 April 2023 the annual amount of qualifying care relief would be set at £18,140, and the weekly amounts set at £375 (for each child under eleven) and £540 (for each child eleven or older, and/or each adult) from 6 April 2023. In future years the rates would be increased in line with inflation.