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Families with adopted or fostered children

If you are caring for a child who has been placed with you by the Local Authority (LA), there are special rules about the treatment of any payments or allowances paid to you to help maintain that child, and how such monies may affect your benefit.

If the LA has placed a child with you under certain legal provisions, you may receive one of the following allowances:

Depending on which one you receive, different rules apply as to whether the child is included in your household for benefits purposes and whether these allowances are taken into account as income for means-tested benefits.

What about means-tested benefits?

If you are in receipt of Income Support, Income Based Jobseekers Allowance, Employment and Support Allowance (Income Related), Pension Credit, Local Housing Allowance (LHA), Housing Benefit and Council Tax Benefit, the rules below show how payments made by the LA may affect these benefits.

Adoption Allowance

An Adoption Allowance is disregarded in full for Pension Credit, Income Support, Employment and Support Allowance (Income Related) and Income Based Jobseekers Allowance, unless your benefit still includes amounts for children included in your claim since before 6 April 2004 and for whom you do not yet have a claim for Child Tax Credits.

For all working age clients’ claims to LHA, Housing Benefit and Council Tax Benefit, it is taken into account up to the level of the adopted child’s personal allowance and any disabled child premium and anything above that is ignored.

Adoption Allowance is disregarded in full for pension age clients for Housing and Council Tax Benefit claims.

Child Benefit and Child Tax Credits may be payable as long as payments of Adoption Allowance do not include monies paid under Section 23 of The Children’s Act, towards the maintenance and accommodation costs.  

Carer's Allowance, Disability Living Allowance and Working Tax Credits can still be claimed.

Carer's Allowance

  • Foster Carers can claim Carer's Allowance as long as any reward element included in the Fostering Allowance does not exceed that current year’s lower earning limit
  • The cared for person/child is in receipt of Disability Living Allowance (DLA) at the middle/high rate care component or any rate of Attendance Allowance.

Disability Living Allowance

DLA continues for a child who is placed in foster care.

  • The Social Worker and DLA unit decide who this is paid to
  • This could be the parent, foster parent or another appointed person
  • If the child was not intended to be in care for more than 12 weeks, the original appointeeship will not be ended until eight weeks has passed.

Fostering Allowance

If a child is placed or boarded out with you and you receive a fostering allowance, that child is not counted as part of your family and you cannot have an allowance for that child included in your claim for:

  • Income Support
  • Jobseekers Allowance (income-based)
  • Employment and Support Allowance (Income Related)
  • Housing Benefit/Council Tax Benefit
  • Local Housing Allowance
  • Child Benefit
  • Child Tax Credit
  • Working Tax Credit
  • Pension Credit

However, if you are in receipt of one of these benefits already, then the amount of Fostering Allowance you receive is ignored altogether as income.

Benefits you can claim for the child are:

  • Disability Living Allowance
  • Carers Allowance
  • Working Tax Credit.

Residence Order Allowance

  • This is treated the same way as the Adoption Allowance
  • If the Local Authority makes a lump sum payment to you to make adaptations to your home for a disabled child, this is treated as capital and ignored.

Child Tax Credits

Child Tax Credit is paid to families with children. It replaces the child elements that were previously paid with Income Support or Income-based Jobseekers Allowance, Working Families Tax Credit and Disabled Persons Tax Credit.

The HM Revenue & Customs pays Child Tax Credits.

How do you qualify?

  • Your income is sufficiently low
  • You have at least one dependant child or young person for whom you are responsible
  • You are present in Great Britain and not subject to immigration control

Being responsible for a child means that he/she is resident with you and that you count as having the ‘main responsibility’ for the child. However, you do not count as responsible if the child is being fostered or if the child is with you waiting to be adopted. Seek advice.

Working Tax Credits

Working Tax Credit is paid to low-paid workers. It tops up your wages if you are in part-time or full-time work. This benefit replaces all the adult elements of Working Tax Credit and Disabled Persons Tax Credit.

The HM Revenue & Customs administers Working Tax Credits.

To qualify, you must:

  • be working at least 16 hours a week
  • have a sufficiently low income
  • be present and resident in Great Britain and not subject to ‘immigration control’.

You may qualify for an additional amount of money if you are disabled and that disability puts you at a disadvantage of getting a job or you or your partner work more than 30 hours per week.

When calculating Tax Credits, both you and your partner’s gross taxable income is taken into account and compared against the levels that the government have stated are applicable for your circumstances.

If you receive a fostering allowance from the Local Authority or voluntary organisation, this is ignored as income so long as it does not count as taxable profits of a business.

If you receive an adoption allowance for a child who is a member of your household, it is ignored completely.

Statutory Adoption Pay (SAP) and Statutory Paternity Pay (SPP)

SAP and SPP were introduced on 6 April 2003. If you have recently adopted a child you may be entitled to SAP or SPP. You may also be entitled to SPP if your partner has recently given birth or has adopted a child.

Your employer pays SAP and SPP in the same way as Statutory Sick Pay. You do not have to have paid enough National Insurance contributions, but you do have to satisfy employment and earning conditions. Your entitlement is not affected by any other income or savings that you may have.

To qualify:

  • a child has been or is expected to be placed with you for adoption under UK law
  • you satisfy the continuous employment condition of being employed for a continuous period of 26 weeks ending with the week in which you were notified you have been matched for adoption
  • you satisfy the earnings condition of earning at least the lower earnings limit
  • you have given your employer the required amount of notice – 28 days before your adoption pay is due to start
  • you are not claiming SPP.

You cannot work for an employer while claiming these benefits.

How to claim

Claims and payment are made in agreement with your employer.

For more information contact the Welfare Benefits Service on 01634 306000 or welfare.benefits@medway.gov.uk

Families with adopted or fostered children leaflet

Download the Families with Adopted or Fostered Children leaflet (pdf 165KB).

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