Children's Handbook Scotland | 2023/24Chapter 8: Children living with foster carers 2. Benefits and tax credits for foster carers
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2. Benefits and tax credits for foster carers
Child benefit
If a child has been placed in foster care with you and the local authority or fostering agency is paying towards the child’s maintenance and/or accommodation (eg, a fostering allowance), you cannot get child benefit (or guardian’s allowance) for the child.1Sch 9 SSCBA 1992; regs 16 and 18 CB Regs
Means-tested benefits
Universal credit
If you are on universal credit (UC), it does not include any child element, or disabled child element, for a child you are fostering.1Reg 4 and 4A UC Regs You do not get any help with childcare costs in your UC for a child you are fostering. The housing costs element for rent is limited depending on how many bedrooms you are deemed to need (called the ‘size criteria’). The size criteria does not include a child you are fostering. You are allowed one extra room in the size criteria, regardless of how many children you foster. This applies while you have a foster child or children living with you and also during a period of up to one year while you are an approved foster carer but do not have a child placed with you.2Sch 4 paras 8, 9, 10 and 12 UC Regs Any income from fostering that you receive does not count as income for UC.3Reg 66 UC Regs
If you are the ‘responsible foster parent’ (see below) and you are caring for a child aged under one, you are not subject to any work-related requirements (see here).4s19(2)(c) WRA 2012; regs 85 and 89(1)(f) UC Regs If you are the responsible foster parent and you are caring for a child aged between one and 16, you are subject to the work-focused interview-only requirement (see here). This can extend beyond the child’s 16th birthday if they have care needs which would make it unreasonable for you to meet the work search or work availability requirements, even if these were limited.5Reg 91 UC Regs
If you are claiming UC as a couple and your partner is the responsible foster parent, you can be subject to the work-focused interview-only requirement if you and your partner are both foster carers and are caring for a child or qualifying young person who has care needs which would make it unreasonable for either of you to meet the work search or work availability requirements, even if these were limited.6Reg 91(2)(c) UC Regs
If you have a gap between placements where you do not have a child living with you, you can continue to be subject to the work-focused interview-only requirement for up to eight weeks, providing this requirement applied to you before the break started.7Reg 91(2)(d) UC Regs
Responsible foster parent
‘Responsible foster parent’ means that either you are the child’s only foster carer or, if you are a member of a couple who are both foster carers, you and your partner have nominated you as the responsible foster parent. Only one of you can be nominated. The nomination applies to all of your children and can only be changed once in the 12 months after the nomination or if there has been a relevant change of circumstances.8Regs 85 and 86 UC Regs
Income support
Note: if you are not already getting income support (IS), you cannot now claim it because of the introduction of UC.
If you are on IS when you become a foster carer, your IS is not normally affected.
You cannot normally get IS if you are in ‘remunerative work’ of 16 hours or more a week. However, provided you are receiving a fostering allowance, fostering does not count as remunerative work for IS purposes.1Reg 6(1)(k) IS Regs
If you are a single person fostering a child under 16, you can get IS on this basis.2Sch 1B para 2 IS Regs You must actually have a child placed with you to be able to claim IS under this rule – ie, not be between placements.
Any payment you receive for fostering is disregarded as income for IS.3Sch 9 para 26 IS Regs However, if you are paid any type of payment (such as a retainer) while you do not have a child accommodated with you, this is treated as income.4Sch 9 para 26 IS Regs
Employment and support allowance
Note: if you are not already getting income-related employment and support allowance (ESA), you cannot now claim it because of the introduction of UC.
If you are getting income-related ESA when you become a foster carer, it is not normally affected. You cannot normally get ESA if you are working, but fostering does not count as work for ESA purposes. Any payment you receive for fostering is disregarded as income for income-related ESA.1Sch 8 para 28 ESA Regs However, if you are paid any type of payment (such as a retainer) while you do not have a child accommodated with you, this is treated as income.2Sch 8 para 28 ESA Regs
Contributory ESA is not means tested and is not affected by any income you have from fostering.
Jobseeker’s allowance
Note: if you are not already getting income-based jobseeker’s allowance (JSA), you cannot now claim it because of the introduction of UC.
If you are on JSA when you become a foster carer, your JSA is not normally affected.
You cannot get JSA if you are in ‘remunerative work’. However, provided you are receiving a fostering allowance, fostering does not count as remunerative work for JSA purposes.1Reg 53(f) JSA Regs Any payment you receive for fostering is disregarded as income for income-based JSA.2Sch 7 para 27 JSA Regs However, if you are paid any type of payment (such as a retainer) while you do not have a child accommodated with you, this is treated as income and may reduce the amount of your income-based JSA.3Sch 7 para 27 JSA Regs
Contribution-based JSA is not means tested and is not affected by any income you have from fostering.
Pension credit
Some pension credit (PC) claimants who are responsible for a child or qualifying young person get an additional amount for the child(ren) in their PC (instead of child tax credit (CTC)). You will not receive an additional amount in your PC for a child you are fostering.1Sch 2A para 4 SPC Regs Any payment you receive for fostering is disregarded for PC purposes. If you receive a payment while you do not have a child accommodated with you (eg, a retainer), this should not count as income unless it is treated as earnings.2s15 SPCA 2002; reg 17B SPC Regs
Housing benefit and council tax reduction
If you are on housing benefit (HB)/council tax reduction (CTR) when you become a foster carer, your HB/CTR is not normally affected. There are no amounts included in your ‘applicable amount’ (see here) for foster children,1HB Reg 21(3) HB Regs; reg 21(3) HB(SPC) Regs
CTR Reg 7(8) CTR(S) Regs; reg 11(2) CTR(SPC)(S) Regs
 and any payment you receive for fostering is disregarded as income for HB/CTR.2HB Sch 5 para 26 HB Regs; reg 38(2) HB(SPC) Regs
CTR Reg 57 CTR(S) Regs; reg 35(2) CTR(SPC)(S) Regs
 However, if you are under pension age and you are paid any form of payment (such as a retainer) while you do not have a child accommodated with you, this is treated as income for HB.3HB Sch 5 para 26 HB Regs
If you are a tenant in the private rented sector (not local authority or housing association), your HB is probably calculated on the basis of a ‘local housing allowance’ (see here). This means that the maximum HB you can get is an amount determined by where you live and how many rooms you and your family require (the ‘size criteria’). The size criteria does not include room(s) for any child(ren) you are fostering, although you are allowed one extra room if you are a foster carer. This applies while you have a foster child or children living with you and also during a period of up to one year while you are approved as a foster carer but do not have a foster child living with you.4Regs 2 and 13D(3A)(b) HB Regs; regs 2 and 13D(3A)(b) HB(SPC) Regs
If you are under pension age and living in the social rented sector, your HB may be reduced if you are under-occupying your home (see here). When assessing whether you are under-occupying your home, you are not counted as needing rooms for any children you are fostering, although you are allowed one extra room because you are a foster carer. This applies while you have a foster child or children living with you and also during a period of up to one year while you are approved as a foster carer but do not have a foster child living with you.5Regs 2 and B13(6)(b) HB Regs
If you are struggling to pay your rent as a result of this or the local housing allowance rules, apply for a discretionary housing payment (see here).
Scottish child payment
You will not be treated as responsible for a child you are fostering for the purposes of Scottish child payment and therefore will not be entitled to Scottish child payment for the child.1Regs 9 and 12 SCP Regs
Non-means-tested benefits
Disability benefits
If the child you are fostering gets child disability payment (CDP), they keep getting it while in foster care as long as they continue to satisfy the usual conditions of entitlement.1Reg 9(4) and (5) SS(DLA) Regs; reg 17(5) DACYP(S) Regs Once the young person reaches age 16, if they are still on CDP, or if they get adult disability payment (ADP) or personal independence payment (PIP), the mobility component continues. The care component (CDP) or daily living component (ADP or PIP) continues if either:2Reg 9(4)(b) SS(DLA) Regs; reg 28(3) SS(PIP) Regs; s93(4)(a)(ii) and (iii) C(S)A 1995; reg 17(5)(a)(ii) DACYP(S) Regs; reg 27(5) DAWAP(S) Regs
    •their health or development is likely to be significantly or further impaired without provision of services; or
    •they are in need of care and attention because they are disabled.
If you think the child for whom you care is entitled to CDP, you can make a claim on their behalf.
If the child has been in local authority accommodation (eg, a residential unit) before coming to live with you, their CDP care component may have stopped being paid. Let Social Security Scotland (SSS) know they are now living with you and the care component should be paid again.
If a child you are fostering gets CDP, you may be able to be appointed to act on the child’s behalf in relation to their CDP award.3s85A SS(S)A 2018 Contact SSS about this.
Carer’s allowance and carer support payment
You cannot get carer’s allowance (CA) or carer support payment (CSP) if you are ‘gainfully employed’, which means if you are earning more than £151 a week. Any payment you receive for fostering does not count as earnings for this purpose and therefore does not prevent you being entitled to CA/CSP.1Sch 1 para 6 SSB(CE) Regs
If you are entitled to CA/CSP and you also get UC, IS, income-related ESA, income-based JSA, PC or HB/CTR, you should get a carer element, carer premium or carer addition in your applicable amount (see Chapter 1).
If you are entitled to CA/CSP you may also be entitled to carer’s allowance supplement (see here).
Tax credits
Child tax credit
You cannot get CTC for a child you are fostering if you are getting a fostering allowance.1Reg 3(1) r4 CTC Regs You may still qualify for CTC for other dependent children who are not fostered.
Working tax credit
Note: if you are not already getting tax credits, you cannot make a new claim because of the introduction of UC.
In order to get working tax credit (WTC), you have to be in ‘qualifying remunerative work’. This means that you are working (either employed or self-employed) for a certain number of hours a week and fall into at least one of five categories (see below). Fostering should count as self-employed work for tax credit purposes, provided you are paid, and so you may be able to get WTC.1Reg 4 WTC(EMR) Regs
 If you are a foster carer and you are refused WTC on the basis that you are not self-employed, seek advice immediately.
You may be able to get WTC if:
    •you are aged at least 25 and you work at least 30 hours a week; or
    •you are aged at least 60 and you work at least 16 hours a week; or
    •you are a single claimant, have a dependent child, and you work for at least 16 hours a week. The child you are fostering does not count as dependent for this purpose, but if you have a child of your own, they do count; or
    •you are a couple, have a dependent child and your combined working hours are at least 24 a week. The child you are fostering does not count as dependent for this purpose, but if you have a child of your own, they do count. If you both work, one must do at least 16 hours a week. If only one works, they must do at least 24 hours a week. Note: if you are a couple with a dependent child and the non-working partner is incapacitated, a hospital inpatient, in prison or entitled to CA, you can qualify if you work at least 16 hours a week; or
    •you have a disability which puts you at a disadvantage in getting a job, and you work for at least 16 hours a week.
Fostering payments up to £19,360 a year, plus £405 a week for each child under 11 and £485 a week for each child aged 11 or over, are not liable for tax, according to the HM Revenue and Customs (HMRC) tax relief scheme (2024/25 amounts). Fostering payments that come below this level are therefore ignored as income for tax credit purposes.2Reg 19 Table 6 para 9 TC(DCI) Regs See gov.uk/government/publications/increase-in-qualifying-care-relief/qualifying-care-relief-increase for more information.
National insurance credits
You are entitled to be credited with class 3 NI contributions for any week in which you are an approved foster carer.1s23A(2) and (3)(b) SSCBA 1992; regs 4 and 9 SS(CCPC) Regs These credits can help you qualify for retirement pension and some other benefits. You must apply to HMRC to be credited with NI contributions.2Reg 9(a) SS(CCPC) Regs Complete Form CF411A (available at gov.uk/government/publications/national-insurance-credits-for-parents-and-carers-cf411) after the end of the tax year and send it to HMRC with a letter of confirmation from your fostering agency or local authority.