i have been asked by my local Fostering and Adoption Team to assist in preparing a report on the effect on foster care payments in relation to Social Security Benefits. I know that the foster care allowance is ignored but the "element of reward" is taken into account.
However, one of our SW officers says that he attended a conference 2 years ago and one Authority overcame the problem by chaning the wording of the element of reward" to get it ignored for benefits purposes but cannot remember wwho brought up the subject matter.
I have looked but cannot find anything to overcome this. Can anyone help?

My understanding is that Foster Care Payments can be split into three types:
1. basic fostering allowance – paid during a period when a child is on placement
2. fees – additional money on top of basic allowance paid during a period when a child is on placement, e.g., to reflect your skills and experience and the complexity of the child’s needs
3. retainers - paid during periods when no child is on placement

Benefits
Both the basic fostering allowance and additional fees paid by a Local Authority, while you are fostering a child, are ignored as income when assessing your eligibility for means tested benefits.

Income Tax
Regular fostering allowances are not taxable nor are any additional fees made to meet expenses incurred by foster carers. Most LA have an arrangement with the local tax office that a percentage of the additional fees will be treated as covering expenses. The remainder will be taxable income. So, if you get additional fees you will be treated as self-employed and may have to pay tax and National Insurance on some of this and you must register as self-employed with the Inland Revenue.

sorry! What I said about income tax is out of date as new rules were introduced in April 03 for foster parents. The following link should take you to an article on the subject.

http://www.litrg.org.uk/help/lowincome/selfemployed/assessment.cfm#foster

Does anyone know any information reagrding payment for skills paid by the local authority? How will this affect a foster carers benefit especially if they are in receipt of reduced earnings allownace? Will this count as income?

In Northumberland the LA has a two tier structure for fostering payments. There is a "boarding out allowance" paid only when the carer is looking after a child and intended to cover accommodation and maintenance. There is also an additional "fee" which is a retainer paid every week regardless of whether the carer has a child or not, and which is conditional on the carer not taking any other employment. It is effectively compensation for loss of earnings. Somewhat surprisingly a local DWP complex decision maker advised me, after detailed discussion and research into the regs, that both the boarding out allowance and fee would be disregarded for means tested benefits because the regs do not distinguish between different types of fostering payments. I know other DMs have taken a different view. Anybody know if this has been tested at Commissioners? Couldn't find anything myself.