Does Fostering Affect Your Benefits, Council Tax & Child Benefit?

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Jul 28
4 min read

If you're currently receiving benefits and thinking about fostering, one of the first things you'll want to know is:

"Will becoming a foster carer affect the support I'm already getting?"

It's a really important question — and the answer, for most people, will come as a relief. In the majority of cases, fostering does not reduce your existing benefits. Here's a clear breakdown of how it works.

Why Doesn't Fostering Affect Most Benefits?

Fostering allowances are treated differently from regular earnings by the Department for Work and Pensions (DWP). Rather than being counted as income, fostering payments are generally disregarded when your entitlement to means-tested benefits is calculated.

This is because fostering is recognised as a public service, the allowance you receive is partly a reimbursement for a child's living costs, not simply a wage. The rules are designed to make sure that people aren't financially penalised for opening their home to a child in need.

Universal Credit

Fostering payments are disregarded when calculating your Universal Credit entitlement. This means starting a placement should not reduce the Universal Credit you're already receiving for yourself and your family.

A few important points to be aware of:

You cannot claim the child element of Universal Credit for a foster child — this is because your fostering allowance already covers the child's costs
If you are the main carer (or a lone foster carer), you will generally not be required to look for work or attend work-focused appointments while you have a child in placement
If you have a placement and are expecting another, your work-related requirements are also reduced

So while your UC amount for yourself and your own children stays the same, fostering can also give you more flexibility around work requirements.

Housing Benefit

Housing Benefit is means-tested, which means your income is assessed when calculating your entitlement. Fostering income is disregarded in this assessment, so starting a fostering placement should not reduce any Housing Benefit you're entitled to.

Child Benefit for Your Own Children

If you already receive Child Benefit for your own children, that will continue unchanged when you start fostering. Fostering does not affect your Child Benefit for your birth or adopted children.

However, you cannot claim Child Benefit for a foster child. Because you receive a fostering allowance that covers the child's day-to-day costs, Child Benefit is not payable on top of that.

Council Tax

Foster carers do still pay Council Tax on their property — fostering doesn't exempt you from it altogether.

That said, there are a couple of things worth knowing:

A foster child does not count as an adult occupant for Council Tax purposes. If you live alone and take in a foster child, you can still claim the 25% single-person discount.
Low-income foster carers may be eligible for a Council Tax Reduction through their local authority, as fostering income is disregarded in the means-test for this reduction.

The rules vary by council, so it's worth contacting your local authority to find out exactly what you might be entitled to.

Tax Credits (Child Tax Credit & Working Tax Credit)

If you're still receiving Tax Credits (rather than having moved to Universal Credit), fostering income is also disregarded when calculating your entitlement. You can continue to claim Child Tax Credit for your own children.

If your fostering income results in a taxable profit, which is unusual for most carers thanks to Qualifying Care Relief, only that profit, not the whole allowance, would be considered as income for tax credit purposes. For most carers, this figure is nil.

Disability Living Allowance (DLA)

If a foster child in your care has a physical or mental health condition, they may be entitled to Disability Living Allowance (DLA). This payment belongs to the child and covers the additional costs of their condition.

DLA does not count as income for you as the carer, and it will not affect your own benefit entitlement. It is entirely separate from the fostering allowance.

National Insurance & State Pension

Foster carers are eligible to claim National Insurance credits for every week they are approved — even during periods when there is no child in placement. These credits count towards your basic and additional State Pension.

You apply once a year, retrospectively, using form CF411A along with a letter from your agency confirming your approval. It's a simple process that can make a meaningful difference to your long-term pension entitlement.

What About My Own Children — Will Fostering Affect Them?

Fostering a child does not affect any benefits you receive in relation to your own children. Child Benefit, Child Tax Credit, and the child element of Universal Credit for your own family all remain unchanged.

In Summary

Benefit	Impact of Fostering
Universal Credit	Fostering income disregarded. No child element for foster child.
Housing Benefit	Fostering income disregarded.
Child Benefit (own children)	Unaffected.
Child Benefit (foster child)	Not claimable — covered by fostering allowance.
Council Tax	Still payable, but foster child doesn't count as adult occupant. Reduction possible for low incomes.
Tax Credits	Fostering income disregarded.
DLA (foster child)	Belongs to child, doesn't affect carer's benefits.
State Pension	NI credits available for every approved week.

Still Not Sure How It Applies to You?

Every situation is different, and if you have a more complex benefits position, it's always worth speaking to an independent benefits adviser or contacting your local Citizens Advice. Our team at Futures Group is also happy to talk through any concerns you have in confidence.

You can also read our related guides:

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This guide is for general information only. Benefit rules can change, and the impact on your individual situation may vary. Please speak to a qualified adviser or contact Citizens Advice for guidance specific to your circumstances.