How fostering pay works in practice
Foster carers receive a weekly allowance that covers the child’s everyday needs and a separate skill‑level fee that recognises the carer’s training and experience. Payments are made directly to the carer’s bank account each week, providing a regular cash flow that can be budgeted like a salary.
For example, a Level 2 carer caring for a six‑year‑old receives a £194 weekly allowance plus a £190 skill‑level fee, totalling £384 per week (£19,968 per year). A Level 3 carer caring for three siblings (ages 16, 11 and 8) might receive a £672 weekly allowance, a £630 skill‑level fee and a £35 16‑plus allowance, resulting in £1,337 per week (£69,524 per year).
Age‑based allowance differences and why they exist
The weekly allowance varies by the child’s age because older children typically have higher food, clothing and activity costs. The government’s National Minimum Allowance (NMA) sets baseline rates, which agencies often exceed.
Typical rates (2025‑2026 tax year) are:
- Children under 5: £160 weekly allowance
- Children 5‑11: £190 weekly allowance
- Children 12‑17: £210 weekly allowance
- Children 18‑21 (in care): £140 weekly allowance
These figures are adjusted each tax year; the latest tables are explained in detail for London, South‑East and the rest of England here.
Skill‑level fees and realistic progression
Foster carers are classified into three skill levels. Level 1 is entry‑level, Level 2 requires completion of the Training and Support Development Scheme (TSDS), and Level 3 adds specialised training for complex needs.
Progression typically follows this timeline:
- Months 0‑6: Level 1 (no skill fee, only weekly allowance)
- Months 6‑18: After completing TSDS, promotion to Level 2 adds a skill‑level fee of roughly £180‑£190 per child per week.
- Months 18‑36: Additional training for caring for children with special educational needs upgrades the carer to Level 3, adding a fee of £300‑£330 per child per week.
Carers can see a 30‑40 % increase in total weekly income when moving from Level 1 to Level 3, as illustrated by the example above.
Regional variation and cost‑of‑living impact
Allowances are higher in high‑cost regions to reflect the extra expenses of living in those areas. For instance, a Level 2 carer in London may receive a £210 weekly allowance for a 6‑year‑old, compared with £190 elsewhere.
When budgeting, carers should adjust their expected net income by the regional multiplier (approximately 1.10 for London, 1.05 for South‑East, and 1.00 for the rest of England). This ensures the allowance realistically covers rent, utilities and transport.
Multiple placement scenarios
Payments are calculated per child, so caring for siblings or multiple children multiplies the weekly total. The table below shows two common scenarios:
- Single child (age 8, Level 2): £190 allowance + £190 skill fee = £380 per week.
- Three siblings (ages 16, 11, 8, Level 3): £210 + £210 + £210 allowance = £630; skill fees £330 + £330 + £330 = £990; plus a £35 16‑plus allowance = £1,655 per week.
Understanding these totals helps carers anticipate cash flow when they take on additional placements.
Gaps between placements and income stability
When a placement ends, carers receive a Bridging Retainer Payment (usually £300‑£500) to cover the short‑term loss of income while waiting for a new match. Additionally, a Paid Holiday entitlement (up to 14 days per year) is paid at the skill‑level fee rate, providing further buffer.
Example cash‑flow plan:
- Week 1‑52: Regular weekly payments as above.
- Week 53 (placement ends): Receive £400 bridging retainer.
- Weeks 54‑56 (search period): No weekly allowance, but the retainer sustains basic expenses.
- Week 57: New placement starts, weekly payments resume.
Carers can use a simple budgeting spreadsheet to track these inflows and avoid short‑term deficits.
Tax treatment with worked examples
Foster care payments are generally exempt under Qualifying Care Relief (QCR). However, if a carer’s total earnings (including other employment) exceed the personal allowance (£12,570 for 2025‑2026), the excess may be taxable.
Example 1 – Below threshold: A Level 2 carer earns £19,968 from fostering and no other income. Because the amount is treated as tax‑free under QCR, no Income Tax or Class 4 NICs are due.
Example 2 – Above threshold: A Level 3 carer also works part‑time earning £10,000. Total earnings = £69,524 + £10,000 = £79,524. After the personal allowance, £66,954 is taxable. The carer pays Income Tax at 20 % on the first £37,700 (£7,540) and 40 % on the remaining £29,254 (£11,702), plus Class 4 NICs on the profit portion. Detailed guidance on QCR and record‑keeping is available here.
Interaction with benefits – real‑world scenarios
Because fostering payments are classed as self‑employment income, they usually do not affect entitlement to means‑tested benefits. Carers may still qualify for Working Tax Credit or Child Tax Credit if their total household income remains below the relevant thresholds.
Scenario A: A single carer with a Level 2 placement (£19,968) and no other income applies for Universal Credit. The allowance is treated as earnings, but the carer’s work allowance (up to £4,400) means the first £4,400 is ignored, leaving £15,568 to be assessed. The carer may still receive a modest Universal Credit award.
Scenario B: A couple caring for three siblings (£69,524) also receives a modest salary (£8,000 each). Their combined income exceeds the Universal Credit threshold, so they are not eligible for additional benefits, but they may still claim the Child Tax Credit for the children in care.
Carers can use the Turn2Us benefits calculator to check eligibility here.
Common misunderstandings that lead to wrong expectations
- “All fostering pay is taxable.” – Most payments are tax‑free under QCR; tax only applies if total earnings exceed the personal allowance.
- “The allowance covers every expense.” – While the weekly amount is intended for the child’s needs, carers must still budget for additional household costs such as increased utilities.
- “I will receive the same amount regardless of region.” – Regional adjustments mean London and South‑East carers receive higher rates to offset living costs.
- “Placement gaps mean no income.” – Bridging retainers and holiday pay provide a safety net, but carers should plan for up to three weeks without a weekly allowance.
- “Fostering and adoption provide identical financial support.” – Adoption involves a one‑off adoption allowance and post‑adoption support fund, whereas fostering offers ongoing weekly payments.
Financial comparison: fostering vs adoption
Both routes support children, but the cash‑flow profiles differ markedly.
Fostering:
- Weekly allowance + skill fee (ongoing, tax‑free in most cases).
- Bridging retainers and paid holiday smooth income gaps.
- No upfront costs; agencies cover placement expenses.
- Potential eligibility for Working Tax Credit/Child Tax Credit.
Adoption:
- One‑off adoption allowance (average £5,000 – £7,000) paid after placement.
- Post‑adoption support fund (up to £3,000) for therapeutic services.
- Adoption fees (court, agency, legal) range £4,000 – £9,000, plus a £885 Department of Education fee.
- Legal parental responsibility eliminates the need for ongoing weekly payments.
When comparing a Level 2 single‑child placement (£19,968 per year) with the average adoption cost (£12,000) and a one‑off allowance of £6,000, fostering provides a higher annual cash flow but requires ongoing budgeting, whereas adoption involves a larger upfront expense but no recurring payments.
Prospective carers should weigh the steady income and flexibility of fostering against the long‑term financial commitment and legal responsibilities of adoption.