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Cymraeg

Benefits and Foster Carers

If you are fostering a looked after child, the arrangements made by the local authority are made under Part 6 of the Social Services and Wellbeing (Wales) Act 2014 (provisions were previously made under Section 23 of the Children Act 1989).

You may, though, be looking after children through different arrangements like a Special Guardianship Order or a Child Arrangement Order. This means that the children are not 'looked after children' and, as a carer, you are not subject to the same rules that apply to foster carers.

For the purpose of claiming benefits, the key factor is whether the children are 'looked after' or not, and this will always be the first question you will be asked when seeking advice about benefits. If your arrangement to look after the child is private and you do not receive financial help from the local authority, the rules described here will not apply to you and you should seek advice.

Benefits System

If you have made a new claim for benefits within the last two years, you may be receiving Universal Credit (UC). UC was introduced in December, 2017, and replaced new claims for six means-tested, working age benefits: Income Support (IS), Employment and Support Allowance (ESA), Jobseekers Allowance (JSA), Housing Benefit (HB), Working Tax Credit (WTC), and Child Tax Credit (CTC). Some groups of people are still able to claim these older benefits (or 'legacy benefits').

If you have already been claiming Social Security benefits for a while you may still be receiving legacy benefits. It is important that you get advice if you know you will be having a change of circumstances that might affect your benefits (such as children joining your family), or if you think you may need to make a new claim for a benefit. This is because a change in circumstances might mean you need to claim UC and you could be financially worse off.

Benefits for Children

The benefits system does not consider foster children (that is, children who are 'looked after' by a local authority) to be 'dependent' children within the foster carer's family. This means that foster carers cannot claim Child Benefit (CB), Child Tax Credit (CTC), child additions within Housing Benefit (HB) and Council Tax Reduction (CTR), or the Child Elements in Universal Credit (UC) for any looked after children.

If the children living with you are looked after children, you should be paid a Fostering Allowance by the relevant local authority. Any fostering allowances you receive are ignored as income when calculating entitlement to social security benefits (more on this below).

If you have a Special Guardianship Order or a Child Arrangement Order, the children are not looked after children because you have Parental Responsibility. This means that the children are considered to be dependent children within the Social Security system and you can claim CB, CTC, additions within HB and CTR, and the Child Elements in UC. You may or may not get Special Guardianship Allowance - if you do, in most cases it is disregarded as income for the purposes of means-tested benefits. Being in receipt of benefits may affect the amount the local authority decides to pay you.

When the young person reaches the age of 16, they may have entitlement to benefits in their own right - any claim would affect your entitlement to the benefits you claim for them (though your Fostering Allowance should not be affected) - seek advice.

Housing Costs

The Bedroom Tax and the Local Housing Allowance

The Bedroom Tax applies to social housing (council or housing association) and the Local Housing Allowance (LHA) applies to those who are in private rented. In both, there is a determination of the number of bedrooms that you require and this number will be used to calculate how much Housing Benefit (HB) you are paid or how much of the Housing Costs Element you will receive in Universal Credit (UC).

You are allocated a bedroom for the following people:

  • Couple/ single adult: 1 bedroom
  • Person aged 16+:  1 bedroom
  • 2 children under 16 of same sex: 1 bedroom
  • 2 children under 10 of opposite sex: 1 bedroom

An additional bedroom can be provided for a child who receives either the middle or higher rate of the care component for Disability Living Allowance (DLA) and it is reasonable for them to have a separate bedroom because of their disability (there are other exceptions so you should seek advice if you have restrictions).

One additional bedroom is provided to foster parents regardless of the number of children they foster or the children's relationships to each other. You could find that you have three foster children but are only able to receive help for one bedroom.

If you have a shortfall between your rent and the amount awarded in your HB or UC, you should apply for a Discretionary Housing Payment (DHP). You will have to show income and expenditure to account for why you are not able to cover the shortfall, and your Fostering Allowance will be taken into account as income when the DHP application is considered.

Mortgages

You may be able to get a loan from the DWP to help with mortgage interest payments, though you are only eligible if you are entitled to Universal Credit (UC), Income Support (IS), income based Jobseekers Allowance (JSA), income related Employment and Support Allowance (ESA), or Pension Credit (PC).

If you accept a loan, payments are usually made direct to your lender and because of the formula used by the DWP to calculate the loan, the amount is not necessarily as much as you have to pay. At the time of writing, the rate of interest on the loan is 1.5%. You should always seek independent advice before taking this loan - note that advice from the DWP or any agency acting on its behalf is not independent advice.

Disability and Carer's Benefits

If your foster child is under 16 and has an illness or disability, they may meet the conditions for Disability Living Allowance (DLA). You can make the claim for DLA for the child and it will be paid to you, but because the benefit is for the child or young person, if the child moves out of your care, the benefit moves with them (remember you will need to notify the DWP of a change like this).

If the young person is over 16, they may meet the conditions for Personal Independence Payment (PIP). The claim is made by and paid to the young person unless they have an appointee.

If the middle or higher rate of the care component for DLA, or the daily living component of PIP, is awarded, you may be able to claim Carers Allowance (CA) if you meet the conditions. This should not affect your Fostering Allowance.

Self-Employment

Tax and National Insurance Contributions

For benefit purposes, fostering is treated as work and foster parents can claim 'in-work' benefits or out of work benefits. All foster parents, regardless of whether they are seen as working or not working for benefit purposes, need to register as self-employed with Her Majesty's Revenue and Customs (HMRC); it can be done online. If you are part of a couple, both of you will be treated as 'self-employed' even if one or both of you have other employment.

Currently, everyone who is registered as self-employed can earn up to £10,000 without being taxed. Foster carers can earn significantly more than this threshold through the Qualifying Care Relief scheme, which is a tax relief scheme. The amount of tax relief you receive depends on your fostering circumstances but, as an example, if you foster a child under the age of 11, you can receive a tax-free income up to £200 per week. For children over 11, it's £250 per week tax-free.

Any taxable profit you receive from qualifying care will be treated as earnings for National Insurance Contribution purposes.

Liability for Class 2 National Insurance contributions will be automatically calculated by the amount of profit declared on your self-assessment form. If your profit does not reach the small profits threshold (£6365 in 2019/20) you will not pay any Class 2 National insurance contributions.  Non-payment of Class 2 national insurance contributions will affect your entitlement to contributory benefits, for example, Retirement Pension, so you should consider making voluntary payments.

Further Advice

If you have a social worker or support worker, they can contact the Welfare Rights Team on your behalf for advice on all benefits. We would advise a 'better off calculation' if you need to move between benefits or if you have a change of circumstances, and we will let your social worker know what information we need to do this.

If you don't have a social worker or support worker, you may be able to access information and advice from the following:

  • Age Cymru West Glamorgan: 01792 648866
  • Swansea Carer's Centre: 01792 653344
  • Citizens Advice Swansea Neath Port Talbot: 0300 3309 082

 

Produced by the Welfare Rights Team, Swansea Council (August, 2019)

 

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