Anyone who is self-employed and earning over a certain amount has to pay National Insurance. You pay National Insurance contributions in order to qualify for certain benefits, including the State Pension.
Your National Insurance contributions are collected by HMRC via your tax return. You pay your National Insurance at the same time as your tax. How much you pay depends on how much income you make as a foster carer.
Types of National Insurance
If you are self-employed and your profits are between £5,965 and £8,060, you will pay Class 2 National Insurance. This is set at £2.80 per week.
If your profits are over £8,060 when you complete your tax return, you will pay Class 4 National Insurance, which is set at 9% on profits over £8,060. This is paid in addition to Income Tax.
Class 4 payments are not linked to your National Insurance record and don’t count towards your benefits or pension entitlement.
If your profits are less than £5,965 you won’t have to pay any National Insurance. However, you can opt to make Class 2 payment voluntarily when you file your tax return.
Registered foster carers are also entitled to claim National Insurance credits, which means the government credits your record with National Insurance for a tax year. These credits enable you cover any gaps in your National Insurance contributions (for example if you are not making enough profit). Credits and voluntary payments enable you to continue to qualify for certain benefits, such as the State Pension.
How we can help:
When we file a Tax Return for you, we will also deal with your National Insurance. This includes:
- Calculating how much National Insurance you have to pay, and when to pay it
- Helping you claim carer credits
- Dealing with correspondence from HMRC
- Answering your questions about National Insurance contributions