Foster Carer Pay in England: Allowances, Fees and Tax in 2025/26

Foster carer pay in England is not straightforward, and most agency brochures make it more confusing by presenting total figures without explaining the structure underneath. Understanding the difference between the child allowance and the professional fee, and how both interact with the tax system, is essential before you make any financial plans around fostering.

The Two-Part Payment Structure

Foster carers in England typically receive two types of payment:

The child allowance covers the actual costs of the child — food, clothing, travel, school materials, activities. This is the child's money, functionally. The Department for Education sets National Minimum Allowance (NMA) rates each April, and all local authorities and IFAs must pay at least this amount.

The professional fee is payment for the carer's labour and expertise. This is not mandatory at any particular rate — it is discretionary. Local authorities typically pay lower professional fees than Independent Fostering Agencies. Some local authorities pay no fee at all, only the child allowance.

In common usage, people refer to the total of both as "foster carer pay" — but understanding which part is which matters for tax purposes.

2025/26 National Minimum Allowance Rates

The DfE announced a 3.55% uplift for 2025/26. The NMA rates are regional: London rates are highest, followed by the South East, with the lowest rates applying to the rest of England.

Child's age — Weekly allowance per child:

These are minimums. Most IFAs and many local authorities pay above these rates, particularly for older children and those with complex needs.

What Professional Fees Look Like in Practice

The range of professional fees across England is significant:

Local authority fees vary from zero to around £150 per week per child, depending on the authority and the child's assessed needs. Derby's Payment for Skills scheme, for example, offers an additional £80 to £230 per week per child depending on the carer's training level and experience.

IFA fees are generally higher. Most established IFAs advertise total payments (allowance + fee combined) ranging from £450 to £850 per week per child, depending on the child's needs, the region, and the agency. Specialist therapeutic agencies like ISP often pay at the higher end because the placements involve children with the most complex needs.

Therapeutic fostering fees from specialist agencies can exceed £1,000 per week for children with the most complex presentations, though these are specialist placements with intensive additional training requirements.

It is worth asking any fostering service you are considering to give you:

1. Their actual allowance rates (which should be at or above the NMA)
2. Their fee structure, and how fees increase with experience
3. Whether there is a retainer for emergency placements

Qualifying Care Relief: Why Most Foster Carers Pay Little or No Tax

The most important financial fact about fostering in England — and the one agencies often mention too briefly — is the Qualifying Care Relief (QCR) scheme. Foster carers are classified as self-employed for tax purposes, but QCR means that most of their fostering income is entirely exempt from income tax.

For the 2025/26 tax year, the QCR tax-free threshold is calculated as:

Fixed household amount: £19,690 per year (shared between two carers in a household)

Per-child weekly amount:

• £415 per week for each child under 11
• £495 per week for each child aged 11 or over

Example: A carer looking after a 13-year-old for a full year would have a tax-free threshold of:

• £19,690 (fixed amount)
• £495 × 52 = £25,740 (per-child amount)
• Total tax-free threshold: £45,430

If the carer's total fostering income is below £45,430 that year, they pay zero income tax on it. Any fostering income above the threshold is taxed at standard income tax rates on just the excess.

For carers with two children placed, the threshold increases by another per-child amount. In practice, the vast majority of foster carers in England pay no income tax on their fostering income at all.

Foster carers also receive National Insurance credits — which count toward their state pension entitlement — even though they are not making standard NI contributions. This addresses the concern many prospective carers have about the impact of fostering on pension rights.

What Happens to Pay During Placement Gaps

Placement gaps are a real financial consideration, and they are more common with local authority fostering than with IFAs. Local authorities have a statutory preference for placing children with their own approved carers first, which means their carers generally have more consistent placements. IFAs, being placement providers for LAs that reach capacity, experience more variable demand.

Some IFAs pay a reduced "retainer" allowance during placement gaps. Most do not — you only receive payment when a child is placed with you.

If financial consistency is a priority, discuss the agency's average placement gap data during your assessment. Agencies reluctant to share this data are worth treating with caution.

Staying Put: Pay After a Child Turns 18

If a young person remains in your home under the Staying Put arrangement (up to age 21), you receive a Staying Put allowance from the local authority. The rates are set locally and are not subject to the National Minimum Allowance framework. They are generally lower than the fostering allowance — this is a common source of friction in the fostering community, since the costs of supporting a young adult toward independence do not disappear at 18.

Expenses Beyond the Allowance

The child allowance is intended to cover the child's costs, not all costs related to the placement. Additional expenses that carers typically incur include:

• Mileage for transporting children to contact visits, medical appointments, and activities — claimed from the fostering service at an agreed rate
• Activity grants — some LAs and IFAs provide separate grants for school trips, Christmas, birthdays, and holidays
• Emergency expenses — covered differently depending on the service; worth clarifying before a placement begins

The England Fostering Approval Guide covers the full financial framework in detail, including a breakdown of the LA versus IFA financial comparison, how to read a fostering service's payment schedule, and what questions to ask before you sign with any agency.

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