Benefit advice for people involved in kinship care

It has been a constant theme of this column that the social security system fails to keep pace with changes in society. An example is kinship care, that variation on fostering whereby local authorities pay family members to care for children as an
alternative to using the looked-after route.

The trouble is that kinship care means nothing to Jobcentre staff if the carers are claiming benefits. Worse, there are so many
variations as to what local authorities mean when they refer to kinship care that sometimes neither the social worker nor the
social security official can grasp what the other is talking about. The carer is then left stranded in the middle.

To understand how kinship care should be dealt with it is necessary to see things through the eyes of those social security
rule-makers and officials. They understand that some children aren’t raised by their natural parents. That is why they are happy
to pay child benefit and child tax credit to whomever the child lives with.

They also understand that some children are in the looked-after system. That’s easy too: a child who is officially fostered is not
seen as part of the foster carer’s family, so the carer cannot include them on any claim for child benefit, child tax credit and so on. To balance that out, the fostering allowance is not counted as income either.

So where does kinship care fall into this pattern, based largely on the child’s legal status? It still hinges on whether the child is looked after. If they are – even if placed with relatives – any payment the carers eceive is, in effect, a fostering payment,
even if it is called a kinship care payment.

This has implications for tax and benefit purposes. The payment will probably be tax-free because it falls within the official
and generous foster care tax relief scheme and will not count as income. But the downside for the carers is that they will
be unable to claim child benefit or tax credit for that child.

If the child is not looked after they can be included on all benefit and tax credit claims. Assuming that payments are coded by
social services to section 17 or 24 of the Children Act 1989, they will be ignored when means-tested benefits and tax credits
are calculated. But the payment, which may be equivalent to what foster carers would receive, could in theory be taxable income.

If the kinship care allowance is classed as a “residence order allowance” it becomes even more complicated because it is ignored as income if the family receive tax credits. But it counts as income if they receive income support that includes an element for the children (but does not count as income if they receive income support that does not include anything for children).

I suggest you keep the words “kinship care payment” out of any discussion with Jobcentre or tax officials. Talk about a fostering payment (if the child is looked after) or section 17 or 24 payments or residence order allowances and then at least the poor officials trying to make sense of what you are saying can look up the right answer.

And perhaps in 10 years, kinship care will find its way into their lexicon.

Gary Vaux is head of money advice, Hertfordshire Council. He is unable to answer queries by post or telephone. If you have a question to be answered please write to him c/o Community Care