Guidance

Local authorities’ recoupment of the education costs of looked after children

Updated 6 July 2026

Applies to England

Summary

This is guidance from the Department for Education (DfE) on implementing new rules about the recoupment of costs incurred by a local authority in England providing education for a looked after child with an education, health and care (EHC) plan or attending a special school who belongs to another local authority in England. The guidance explains:

• the circumstances in which regulations require the recoupment of those costs from 1 September 2026
• how recoupment costs should be calculated

This guidance replaces the previous guidance on recoupment in the high needs funding: 2026 to 2027 operational guide, at section 17.1. This has been amended to refer to this guidance.

Legislation this publication refers to

Although there are references to other legislation, this guidance mainly refers to: 

• The Inter-authority Recoupment (England) (Amendment) Regulations 2026 (‘the 2026 Regulations’), which amend
• The Inter-authority Recoupment (England) Regulations 2013 (‘the 2013 Regulations’)

The 2013 Regulations will be amended in due course to reflect these changes.

Who this publication is for

This guidance is for local authorities. It should be brought to the attention of:

• children’s services finance teams
• special educational needs and disabilities (SEND) teams
• children’s social care teams, including virtual school heads

Main points

To help prevent disputes between local authorities, amendments to the 2013 Regulations made by the 2026 Regulations clarify mandatory recoupment arrangements between local authorities in England, in situations where:

• the local authority that looks after a child places that child in a residential social care setting (that is, a children’s home or foster care placement) in the area of another local authority
• that other authority incurs a cost in providing the child’s education

Looked after children include young people aged 16 to 17 who are preparing to leave care, but remain looked after.

The new recoupment arrangements apply from 1 September 2026 to looked after children receiving primary or secondary education who either:

• have an EHC plan, or
• attend a special school

The recoupment regulations do not cover looked after children receiving further education.

The revised recoupment regulations require the local authority responsible for looking after the child to pay the authority providing their education the amount that they agree. Where the authorities cannot agree within 6 months, the costs specified must be recouped, which include home-to-school transport costs. See What the revised recoupment regulations mean for more information, including how the costs must be calculated.

The 2026 Regulations are made under existing primary legislation and will be reviewed if changes are made to the relevant legislation.

Local authorities should read this guidance alongside the statutory guidance Promoting the education of looked after children and previously looked after children, which sets out their duties to promote the educational achievement of looked after children. Nothing in this guidance should be interpreted as delaying or limiting those duties, including ensuring prompt access to suitable education.

Policy context

Looked after children are those who either:

• have been taken into care, or
• are being provided with accommodation by a local authority in its statutory role under the Children Act 1989

More than half of looked after children have some form of special educational needs (SEN). Some will have SEN and a disability (SEND). A significant proportion of them will also have an EHC plan. Nearly half of looked after children live with foster parents or in a children’s home in a different local authority area from the area of the local authority that looks after them, and attend schools in that other area or elsewhere for their education. 

Under the Children and Families Act 2014, local authorities are responsible for children and young people with SEN who are ordinarily resident in their area. In particular, a local authority is responsible for conducting EHC needs assessments and, where necessary, issuing EHC plans and securing the provision specified for children and young people in the local authority’s area (section 24(1) of the Children and Families Act 2014).

Similarly, a local authority’s duties under section 19 of the Education Act 1996 are generally regarded as applying to those children living in that authority’s area. Under section 19, a local authority must make arrangements for the provision of suitable education at school or otherwise than at school for those children of compulsory school age who, by reason of illness, exclusion from school or otherwise, may not for any period receive suitable education unless such arrangements are made for them.

The Education (Areas to which Pupils and Students Belong) Regulations 1996 (the ‘Belonging Regulations’), as amended by The Education (Areas to which Pupils and Students Belong) (Amendment) (England) Regulations 2009, are used to determine which local authority a person belongs to specifically for the purposes of recoupment. Regulation 2(4) makes clear that the Belonging Regulations do not apply for the purpose of determining which local authority’s area a child is in for the purposes of section 24 of the Children and Families Act 2014. They should not be used to determine which local authority is responsible for conducting an EHC needs assessment and maintaining, securing and funding the provision in an EHC plan, since this must be determined under the Children and Families Act 2014. Similarly, DfE takes the position that the Belonging Regulations are not relevant in deciding which local authority is responsible for making provision under section 19 of the Education Act 1996.

EHC needs assessments and plans

Where a child or young person (including a looked after child) is identified as requiring an EHC needs assessment, it must be carried out by the local authority where the child is ordinarily resident. This may not be the same as the local authority that looks after the child. The reason for this is that the local authority in whose area the child lives knows their local schools and educational provision better, so they are better able to assess what special educational provision may be needed and how it can be delivered through the Local Offer of SEND services and provision. The local authority that looks after the child acts as the ‘corporate parent’ and exercises the statutory parental rights including the right to:

• request that a specific school, college or early years setting be named on the EHC plan
• appeal to the tribunal over decisions relating to the EHC plan

Decisions regarding the child’s EHC plan (including the special educational provision specified and the school or other setting named) are therefore made by the local authority where the child is ordinarily resident, following the statutory processes set out in the Children and Families Act 2014.

When a local authority places a looked after child with an EHC plan in another local authority’s area and that area becomes the child’s ordinary residence, the child’s EHC plan should be transferred, as set out in paragraphs 9.157 to 9.162 of the SEND code of practice.

Inter-authority recoupment of costs

The 2013 Regulations provide a legal basis for the local authority providing education to a looked after child with an EHC plan or attending a special school to recoup the cost of primary or secondary education from the local authority responsible for looking after the child. In relation to England, a ‘special school’ is defined in s.337(1) of the Education Act 1996 as a maintained school, an academy, or a non-maintained special school which is specially organised to make special educational provision for pupils with SEN. Independent special schools are covered if the child’s attendance is in accordance with their EHC plan.

Having consulted on changes to these regulations over the summer of 2025, we have amended them through a new set of regulations made on 24 June 2026. These 2026 Regulations, which amend the 2013 Regulations, come into force on 1 September 2026.

What the revised recoupment regulations mean explains the detail of the changes. It sets out:

• the circumstances in which a local authority incurring education costs relating to a child looked after by another local authority must recoup those costs
• how much is to be recouped

The changes from 1 September 2026 may reflect current recoupment arrangements between some local authorities. If changes to those arrangements are required, the changes should be taken into account in local authorities’ high needs budget plans and monitoring.

The changes recognise that certain local authorities attract a disproportionate number of looked after children from other local authorities because of the number of children’s homes or foster homes operating in their area.

In the case of emergency or very short-term temporary residential or foster home placements by the local authority responsible for the looked after children, it may be reasonable for that placing local authority to pick up the costs directly until a more permanent placement is made or the transfer of the EHC plan is arranged, or both, at which point inter-authority recoupment would apply.

In some cases, the local authority that looks after a child without an EHC plan may make an educational placement for that child in an independent school or independent special school. In such cases, it is the authority in whose area the child is ordinarily resident that is responsible for carrying out any EHC needs assessment. That authority is only responsible for securing that provision by meeting the cost of the independent school fees when it issues an EHC plan naming the independent school. Any fees charged in the meantime would therefore fall to the authority that looks after the child and that made the placement.

Where the local authority in whose area the looked after child lives considers or makes a high-cost placement, for example in an independent or non-maintained special school, they should engage with the local authority that looks after the child whilst the EHC plan is being drawn up or reviewed. This is important where the costs are likely to fall to the local authority which looks after the child through recoupment. It is also important that the local authority making the placement follows the statutory process for an EHC plan and does not treat that child differently from any other child ordinarily resident in the authority’s area in deciding their educational placement.

Voluntary recoupment of costs, as permitted by regulation 8 of the 2013 Regulations, remains in place for looked after children without an EHC plan or not in a special school, as the costs of their education provision are normally within the range that would not impose a disproportionate cost on the local authority in whose area the child lives or goes to school.

What the revised recoupment regulations mean

The amendments to the 2013 Regulations apply from 1 September 2026 and relate to inter-authority recoupment between local authorities in England only, in respect of education provided for a looked after child who has an EHC plan or attends a special school.

The amended 2013 Regulations (new regulation 5A):

• require the relevant local authorities to agree an amount to be recouped
• specify the amount the local authority that looks after the child must pay to the local authority that is funding the education, including funding for any home-to-school transport costs, where agreement cannot be reached within 6 months of a claim for payment having been submitted

The 2013 Regulations remain unchanged with regards to recoupment between English local authorities of the costs of the education of looked after children other than those with an EHC plan or attending a special school (regulation 8).

The 2013 Regulations also remain unchanged with regards to the recoupment of the costs of education provided by a local authority in Wales to a child who belongs to an authority in England (regulations 4 and 7). Local authorities in England should take into account the guidance issued by the Welsh Government on looked after children with additional learning needs.

Scope of the revised recoupment regulations

The costs that can be recouped under the amended 2013 Regulations relate only to the costs of the provision of primary and secondary education, including education in secondary school sixth forms and alternative provision (AP) made in schools. Education otherwise than at school (EOTAS) is included if it is full-time and the child is of compulsory school age. Early years education for children who have attained the age of 2 is also included (within primary education). The primary legislation under which the regulations are made does not permit the recoupment of further education costs (see section 207(2) of the Education Act 2002).

The 2026 Regulations amend regulation 5 of the 2013 Regulations so that it now applies to education provided up to 31 August 2026. The new regulation 5A applies to education provided from 1 September 2026 by a local authority in England for a looked after child who:

• has an EHC plan or attends a special school
• belongs to another local authority in England

The new regulation 5A differs from regulation 5 in that it:

• applies to education for any looked after child with an EHC plan or attending a special school - by contrast, regulation 5 applies to education for a looked after child aged not above compulsory school age with an EHC plan or any looked after child attending a special school
• does not apply only when 3 different local authorities are involved in the provision of education – that is, the authority that looks after the child, the authority responsible for making the education provision, and the authority in whose area the education is delivered
• sets out how recoupment works in the event local authorities cannot agree how much should be paid

The new regulation 5A specifies the amount the local authority that looks after the child must pay to the local authority providing their education, where those local authorities cannot agree how much should be paid within 6 months of the claim for payment being submitted. Calculating the recoupment amount explains how that amount should be calculated in accordance with regulation 5A.

Other aspects of the 2013 Regulations will continue to apply, including:

• regulations 1 to 3 with some minor amendments, including to regulation 1 to make it clear that:
  • regulation 5 now applies to education provided between 1 April 2013 and 31 August 2026
  • regulation 5A applies to education provided from 1 September 2026
• regulation 5, although this now applies to the costs of education provided between 1 April 2013 and 31 August 2026 (after which the new rules come into effect)
• regulations 4 and 7, which apply to the costs of education for those placed by an English local authority into the area of a Welsh local authority
• regulation 8, which applies to the costs of education for looked after children without an EHC plan or attending a special school, and for those under 5 years old in part-time education – regulation 8 has been amended so that it does not apply to education covered by new regulation 5A
• regulation 10, which sets out the procedure for submitting claims for payment

The primary legislation (section 207(7) of the Education Act 2002) allows for the recoupment of the costs of any benefits or services for which provision is made by or under any legislation relating to education. The amended 2013 Regulations specifically refer to the costs of home-to-school transport as included in the new regulation 5A.

In new regulation 5A, looked after children include ‘eligible care leavers’, defined as those young people aged 16 and over who are still in care (that is, remain legally looked-after and under the formal responsibility of a local authority) and preparing to leave by virtue of turning 18. For these and other children leaving the care of a local authority, and who live in the area of another authority, it will always be important for the local authorities concerned to manage that transition point so that when inter-authority recoupment ends the child’s educational provision is not disrupted.

When recoupment is required – illustrative examples

The following illustrative examples provide a number of worked scenarios.

Scenario 1: Child looked after by local authority in whose area they live

Ali is a looked after child with an EHC plan.

She is looked after by local authority A and lives and attends school in the area of local authority A.

The revised recoupment regulations would not apply.

Scenario 2: Child looked after by one local authority but lives and receives education in another authority’s area

Ben is a looked after child with an EHC plan.

He is looked after by local authority A but lives in local authority B and attends school there.

Local authority B is responsible for maintaining Ben’s EHC plan and securing the provision specified in the plan, including allocating any high needs funding to the school.

The revised recoupment regulations require local authority A to pay the costs of his education (from 1 September 2026) to local authority B.

Scenario 3: Child looked after by one local authority but lives in another authority’s area and receives education in the area of a third authority

Charlie is a looked after child with an EHC plan.

She:

• is looked after by local authority A
• lives in local authority B
• attends a special school in local authority C

Local authority B is responsible for maintaining Charlie’s EHC plan and securing the provision specified in the plan, including allocating any high needs funding to the school.

The revised recoupment regulations require local authority A to pay the costs of her education (from 1 September 2026) to local authority B.

The fact that Charlie attends school in local authority C is not relevant, as:

• local authority C is not incurring additional costs from their high needs budget
• responsibility is based on where she lives, not where her school is located

Scenario 4: Child without an EHC plan looked after by one local authority, but lives in the area of another authority

Daniel is a looked after child who does not:

• have an EHC plan
• attend a special school

He is looked after by local authority A but lives in local authority B and attends school there.

Since he does not have an EHC plan, regulation 8 of the revised recoupment regulations permits the recoupment of costs by local authority B from local authority A, but recoupment is not required.

Recoupment process and handling under the amended 2013 Regulations

In accordance with the primary legislation, the amended 2013 Regulations set out that the ‘providing authority’ must submit a recoupment claim to the ‘home authority’ and allow a period for both authorities to agree on the amount to be recouped.

• For a looked after child with an EHC plan, the ‘providing authority’ is the authority responsible in law for securing the provision set out in the plan and therefore providing the funding necessary to secure that provision.
• The local authority that looks after the child is referred to in the regulations as the ‘home authority’.

Recoupment claims by the providing authority to the home authority should be supported by relevant information and evidence to avoid disputes arising.

Regulation 10 of the 2013 Regulations, which is not amended by the 2026 Regulations, requires that any claim for payment which a providing authority makes to a home authority must:

• be made in writing
• specify the person in respect of whom payment is claimed
• specify the amount claimed
• be submitted to the appropriate home authority within 12 months from the end of the financial year in which the provision for education to which the claim relates was made

The provision of education for a looked after child should not be dependent on agreement between local authorities on the costs of that provision, as the child’s engagement in education is a priority. Disputes regarding recoupment must not delay a child’s access to suitable full-time education, in line with statutory duties set out in Promoting the education of looked after children and previously looked after children.

If possible, however, the providing and home authorities should agree whether and how costs are to be recouped before expenditure is incurred. Agreements between the providing and home authority should specify how often costs will be reviewed. Annual reviews of EHC plans can be used to discuss and review costs. Any changes in costs or placement arrangements should be communicated in writing and, if possible, agreed between the authorities in advance.

We expect:

• all claims to be agreed within 6 months of the claim having been submitted by the providing authority
• that the home authority will deal with claims promptly and not wait for 6 months before settling a claim from a providing authority

Consistent application of this expectation will depend on all local authorities having sufficiently robust systems and processes to:

• identify relevant placements
• monitor associated costs
• submit and validate claims
• process payments promptly

Where agreement is not reached within 6 months of the claim being submitted, the new regulation 5A requires that the amount to be recouped is all expenditure incurred by the providing authority during the period to which the claim relates on provision of education for the looked after child in question, including home-to-school transport costs. Information on the calculation of that expenditure amount is set out in the Calculating the recoupment amount section. Although it is possible for the providing and home authority to agree a different amount to be paid within 6 months of a claim being submitted, to avoid disputes arising during that period we recommend that all claims are made and settled without delay on the basis of the cost calculation detailed in the next section.

Although not required by the regulations, we encourage local authorities to calculate costs and settle claims relating to education provided prior to 1 September 2026 on the basis of this guidance, noting that the regulations require that claims must be submitted to the appropriate home authority within 12 months from the end of the financial year in which the educational provision was made.

Calculating the recoupment amount

How the expenditure is calculated depends on the type of provision and is set out in the following sections. In these sections any references to academies include free schools.

Note

The regulations require that the calculation excludes any amount received by the providing authority in respect of the looked after child through the dedicated schools grant (DSG) for the period of the claim. This is to prevent a providing authority being funded twice for the same pupil, through the DSG and through the recoupment of costs for a looked after child.

For 2026 to 2027 this amount is the primary schools or secondary schools per-pupil unit of funding, as calculated for its DSG schools block allocation. These amounts include funding for the costs of additional support for pupils with EHC plans, up to a cost threshold of £6,000 per pupil per annum.

The amounts for each local authority can be found in the schools block allocations table.

The following sections explain how this exclusion should work in the calculation of costs for different types of school and AP setting. The exclusion is not relevant for calculating home-to-school transport costs (see Provision of home-to-school transport). For mainstream maintained schools and academies, we explain why the calculation is the same when a child is attending school outside or inside the providing authority’s area. For maintained special schools and special academies, we explain how the calculation differs in those 2 scenarios.

In all cases, these rules apply where the looked after child is placed by an English home authority in the area of an English providing authority.

Mainstream maintained schools and academies

Where a looked after child with an EHC plan is placed in a mainstream maintained school or academy, the calculation will be the same, whether or not the child is attending a school outside or within the providing authority’s area.

For a looked after child who is attending a school outside the providing authority’s area, the costs incurred by the providing authority will automatically exclude an amount in the DSG in respect of all pupils in the schools that the local authority maintains or the academies in their area, including any looked after children. That amount is called the primary schools or secondary schools unit of funding and is calculated each year for the DSG schools block allocations.

For a looked after child who is attending a school maintained by the providing authority, or an academy in the providing authority’s area, that authority will have received the primary schools or secondary schools unit of funding in the schools block of its DSG allocation. This is equivalent to what the providing authority receives for all its mainstream maintained school and academy pupils, including those looked after, and must be excluded from the recoupment claim and payment.

In both circumstances, therefore, as the primary and secondary schools units of funding include funding for the costs of additional SEN support up to £6,000, the calculation of the providing authority’s costs will be:

• any high needs top-up funding paid by the providing authority to the school in respect of the looked after child, plus
• if the child is in a SEN unit or resourced provision, £6,000 (place funding amount) plus the cost of the per-place amount of any legacy funding that the providing authority is required to pass on to its mainstream maintained schools and academies with a special unit or resourced provision

Maintained special schools and academies

The calculation will differ slightly, depending on whether the child is attending a special school outside or within the providing authority’s area.

For a looked after child who is attending a special school outside the providing authority’s area, the costs incurred by the providing authority will be calculated as:

• £6,000, as that will be the cost incurred by the providing authority as a result of the import/export adjustment to their DSG high needs block, plus
• any high needs top-up funding paid by the providing authority to the school in respect of the looked after child

For a looked after child who is attending a special school maintained by the providing authority, or a special academy in the providing authority’s area, the cost incurred by the providing authority will be calculated as:

• £10,000 (that is the per-place amount in the maintained school’s budget share or academy’s general annual grant), plus
• the cost of the per-place amount of any legacy funding that the providing authority is required to pass on to its maintained special schools and special academies, plus
• any high needs top-up funding paid by the providing authority in respect of the looked after child

The high needs national funding formula has been suspended for the 2026 to 2027 high needs block allocations to local authorities, and there is no unit of funding allocated through the DSG which must be excluded in the case of the calculation of the recoupment amount for maintained special schools and special academies.

Non-maintained special schools

For a looked after child who is attending a non-maintained special school, the costs incurred by the providing authority will be:

• £6,000, as that is the cost incurred by the providing authority as a result of the import/export adjustment to their DSG high needs block, plus
• any high needs top-up funding paid by the providing authority to the school in respect of the looked after child, exclusive of any VAT included in the fees charged as that would be reclaimed by the providing authority

Pupil referral units and AP academies

For a looked after child with an EHC plan who is attending a pupil referral unit or AP academy, or who is being provided with hospital education by a maintained school or academy, the costs incurred by the providing authority will be:

• any cost incurred by the providing authority, normally comprising £10,000 and the legacy funding per-place amount that has to be passed on to pupil referral units or AP academies (whether directly by the providing authority or through DfE’s DSG place funding deductions in respect of academies in its area) – for a providing authority’s AP placements in another authority’s area, such costs may be incurred through a locally agreed transfer of such funding between authorities or a transfer of funding under The Education (Amount to Follow Permanently Excluded Pupil) Regulations 1999 (further information on how these regulations can apply is set out in section 27 of the Schools operational guide: 2026 to 2027), plus
• any high needs top-up funding paid by the providing authority to the school in respect of the looked after child, or
• any per-place hospital education funding allocated by the providing authority to the school for the period the looked after child is in attendance

Independent special schools, independent AP, and EOTAS

For a looked after child with an EHC plan who is attending an independent special school, or AP (including an independent hospital school) that is not arranged in a pupil referral unit maintained by a local authority or AP academy, or is receiving EOTAS on a full-time basis, the costs incurred by the providing authority will be the full cost of the provision of education to that authority. This cost should be exclusive of any VAT included in the fees charged by an independent school as that would be reclaimed by the providing authority.

As indicated in Inter-authority recoupment of costs, wherever possible the costs should be discussed and agreed between the home and providing authority in advance of the placement by either authority.

Provision of home-to-school transport

For a looked after child for whom the providing authority is arranging home-to-school transport, including discretionary provision for 16 to 19 year-olds attending secondary school sixth forms, the costs incurred by the providing authority will be the actual costs. The costs of discretionary transport provision associated with further education, including transport from the child’s place of residence to a sixth form college or 16 to 19 school, are not covered by the regulations.

Where costs are included in wider contractual arrangements, the providing authority should be transparent in disaggregating costs relating to individual pupils. In all cases, we expect the providing authority to consider the value for money of the travel arrangements they make, in the same way they would for any other child ordinarily resident in their area.

Foster carers receive an allowance to cover the cost of caring for a child. Being in receipt of foster care allowance does not affect a child’s eligibility for free travel to school, but a local authority may include additional funding for travel to school in the foster care allowance, provided this is agreed with the foster carer. Where a home authority includes funding within the foster care allowance to enable a foster carer to arrange their own home to school transport for an eligible child, there is no expectation that the providing authority should arrange home to school travel for that child.

In all cases the providing authority should confirm with the home authority whether transport responsibilities and funding are already included within placement arrangements before additional transport provision is commissioned and recoupment of the costs requested.

Transport arrangements should be reviewed on a regular basis, and whenever placement or educational arrangements change. This may mean the cost to be recouped will also change.

Administration costs

Local authorities can agree to the recoupment of administration costs, and we understand that it is common practice for such costs to be included in inter-authority recoupment claims. If local authorities agree that an administration cost can be included in the recoupment amount, we would expect this to be no more than 5% of the amount otherwise claimed. Nevertheless, local authorities cannot generally charge a fee for undertaking a statutory duty, and the revised recoupment regulations do not therefore make specific reference to such administration costs as being included in the amount to be paid where agreement between the providing and home authority is not reached.

As with home-to-school transport costs, any such administration costs must not be charged to the DSG as a result of inter-authority recoupment, either as recoupment expenditure incurred by the home authority or as income to offset expenditure by the providing authority.