Fostering and Universal Credit/Benefits: What Changes?

If you’re a foster carer (or thinking about becoming one), it’s completely normal to wonder how fostering interacts with Universal Credit (UC) and other benefits. The rules are a little different for foster carers than for other claimants—especially around how your fostering payments are treated, what work-related activities you’re expected to do, and which extra elements (like housing or child-related support) you can and can’t receive. This guide breaks down the essentials in plain English, with links to official guidance so you can check details for your situation.

1) How Universal Credit treats fostering payments

The cornerstone rule: your fostering allowance is ignored for Universal Credit calculations. In other words, UC does not count your fostering payments as income. The Department for Work and Pensions (DWP) also does not class fostering as self-employment for UC, so you don’t report your fostering allowance as self-employed earnings in your UC account.

That said, HMRC treats fostering differently for tax: you’re considered self-employed for tax purposes and normally use Qualifying Care Relief (QCR) to work out if you owe any tax on fostering income. Tax and benefits are separate systems—so you can be “self-employed” for HMRC while your UC still disregards fostering payments.

What this means in practice

• You can claim UC if you meet the general eligibility rules (savings, residency, etc.), and your fostering allowance won’t reduce your UC award.
• If you have other earnings (e.g., a part-time job), those do count as income in the normal UC way.

2) Work-related requirements for foster carers (what you’re expected to do)

UC normally sets “conditionality” based on your circumstances. For foster carers, the age of the child in placement (and whether you are the lead carer in a fostering couple) shapes what DWP expects.

• If the foster child is under 1 and you are the single/lead foster carer: no work-related requirements.
• If the foster child is 1–15 and you are the single/lead foster carer: you’ll usually be placed in Work-Focused Interview (WFI) only—i.e., you attend occasional interviews to talk about future plans, but you’re not required to job-search or take up work until the child reaches 16.
• When the foster child turns 16 (or if there’s no child placed), normal requirements can switch back on (e.g., looking for work), subject to your wider circumstances and any agreed tailoring.

There’s also a special rule for family and friends (kinship) carers: if a child joins your household and is aged 1–16, you can be placed in no work or work-related activity for the first 12 months after the child arrives, to help you stabilise care arrangements.

Fostering couples are encouraged to nominate a lead carer for UC—conditionality then focuses on that person while the other partner’s requirements depend on their own situation (e.g., work).

3) UC child elements, Child Benefit and disability benefits: what you can claim

A common misconception is that you can add a foster child to your UC claim and receive the child element for them. You can’t—the foster child’s day-to-day costs are met through fostering allowances, so UC does not pay the child element for a child who is formally in foster care. (Your own children remain fully eligible for child elements if you meet the usual rules.) Reputable kinship advice services and GOV.UK make this distinction clear.

Child Benefit

• For a child in mainstream foster care (where the local authority pays for accommodation/maintenance), you normally can’t claim Child Benefit for that child. GOV.UK’s eligibility page confirms you only get Child Benefit for a foster child if the council is not paying towards their upkeep (unusual in standard fostering).
• For your own children, nothing changes—you keep Child Benefit as normal (subject to the High Income Child Benefit Charge rules if relevant).

Disability benefits and Carer’s Allowance

• If your foster child meets the criteria, they may be eligible for Disability Living Allowance (DLA) or, at 16+, Personal Independence Payment (PIP). That’s a benefit for the child/young person, not for you.
• Carer’s Allowance (CA): if you care 35+ hours/week for someone who gets the qualifying disability benefit (e.g., your foster child on DLA/PIP), you may be able to claim CA, subject to its earnings rules. Check this carefully, as CA can affect UC and other benefits and has interaction rules.

4) Housing costs: the “extra bedroom” rule for foster carers

Under UC’s housing costs rules (and legacy Housing Benefit), approved foster carers can be allowed one additional bedroom for fostering—even during gaps between placements (usually up to 12 months after your last placement or approval). This is crucial for avoiding under-occupation deductions (“bedroom tax”) where the spare room is part of your fostering role. Note that the rule allows only one extra bedroom regardless of how many foster children you care for.

Practical tips

• Keep proof of approval and recent placement/activity; UC may ask for evidence to apply the extra-room allowance properly.
• If you rent privately, make sure the tenancy and local housing allowance rate can accommodate the extra bedroom in practice, even when UC allows it.

5) Council Tax Reduction (CTR) and local help

If you apply for Council Tax Reduction, councils should disregard fostering income when assessing means-tested help. You claim CTR directly through your local authority. Some councils also offer foster-carer discounts or discretionary reliefs—these vary locally, so it’s worth asking.

6) Where tax fits in (and doesn’t)

This article focuses on benefits, but one tax rule matters because people often mix the two up:

• For tax, most carers use Qualifying Care Relief (QCR). QCR sets a generous annual threshold (plus a weekly amount per placement) so many carers owe little or no tax on allowances, and you still submit a return if required. Tax treatment doesn’t change the UC disregard—UC still ignores fostering allowances.

7) What if you also work or have other income?

• Employment or self-employment outside fostering counts as earnings for UC and will be treated under the normal rules (with the usual work allowance/taper if you have children or limited capability for work).
• Work-search expectations depend on the foster child’s age and whether you’re the lead carer (see Section 2). DWP guidance allows tailoring—agree the specifics in your Claimant Commitment and keep your social worker/agency letters handy to evidence caring demands if your situation is complex.

8) Kinship (family and friends) care: how UC recognises your situation

If you’re a kinship/family and friends carer, UC rules acknowledge the intense settling-in period. You can have no work or work-related activity for the first 12 months after the child arrives (age 1–16), then usually move to WFI-only until the child turns 16 if you’re the lead carer. Always keep the placement/order documents and any letters from professionals to confirm your status if UC asks for evidence.

9) Quick scenarios (to make it real)

A. Single foster carer with a 10-month-old placed

• Conditionality: no work-related requirements until the child’s first birthday.
• UC income: fostering allowance ignored; any other earnings counted normally.

B. Couple fostering a 13-year-old; one is the nominated lead carer

• Lead carer: WFI-only (no mandatory job-search).
• Non-lead partner: requirements depend on their own circumstances (could be expected to look for work).

C. Approved carer between placements (last placement ended 3 months ago)

• Housing: can usually keep one extra bedroom counted for UC housing costs during the gap (typically up to 12 months after last placement/approval).

D. Kinship carer—child (age 8) joined 6 weeks ago

• Conditionality: no work or work-related activity during the first 12 months after the child joined your household.

10) What to tell UC (and what to keep on file)

• Tell UC you’re an approved foster carer and when a child is placed/moves on. Use your UC Journal and keep copies of:
  • Approval letter (or Form F summary), placement agreements, and any letters from your agency/local authority confirming dates.
  • For housing, keep evidence of approval/placement dates to support the extra bedroom rule.
• If you’re a kinship carer, keep the order/placement paperwork and any professional letters; UC may ask for evidence to apply the 12-month easement.

11) Other support you might be missing

• Free childcare for foster children of working parents (England): there’s a dedicated pathway—eligibility depends on work and benefit status in the household; check the DfE note and apply through the parallel process if you qualify.
• Benefits calculators: GOV.UK signposts tools to estimate entitlements (useful if your household mixes fostering with other work/benefits).

12) Common myths—busted

“Fostering counts as self-employment for UC.”
No—for UC it doesn’t, and you don’t declare your allowance as self-employed earnings. (It does count as self-employment for tax—different system.)

“You can add a foster child to your UC claim to get the child element.”
No—the child element isn’t paid for foster children because their costs are covered by fostering payments.

“You’ll be sanctioned if you don’t job-search while fostering.”
Not if you’re the single/lead carer with a child under 16 in placement; you’re normally WFI-only (or no requirements if the child is under 1). Agree your commitment with your work coach.

“The ‘spare room’ for fostering will cut my housing support.”
Approved foster carers can be allowed one extra bedroom for UC/Housing Benefit size rules (including between placements, within the usual limits).

13) Key takeaways

• Your fostering allowance is ignored for UC and fostering is not self-employment for UC. Report other earnings as usual.
• Work expectations depend on the child’s age and whether you’re the lead carer (under 1: no requirements; 1–15: WFI-only; 16+: normal rules can resume). Kinship carers get a 12-month easement from the child’s arrival.
• You can’t claim the UC child element or Child Benefit for a child in mainstream foster care (your own children are unaffected).
• For housing, foster carers can usually count one extra bedroom in size criteria (even between placements for a time).
• For tax, use Qualifying Care Relief—but this does not affect UC’s disregard of your fostering allowance.

Final word

Benefits can be nuanced—especially if you mix fostering with work, have a partner with different commitments, or you’re a kinship carer navigating a new placement. Use a benefits calculator and keep your claimant commitment up-to-date, and don’t hesitate to show your work coach written confirmation from your fostering service if your caring duties change. For personalised checks, GOV.UK’s foster parent support page and national advice charities are solid starting points.