Fostering National Insurance Allowances

Anyone who is self-employed and earning over a certain amount has to pay National Insurance (NI). You pay NI 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 NI at the same time as your tax. How much you pay depends on how much income you make as a foster carer.

Self-employed people pay Class 2 National Insurance (NI).

Keeping your NI record up to date is important to ensure that you maximise your state pension at retirement date.

If your fostering profits are over a certain level (the small profits threshold set each year by HMRC) you are required to pay HMRC Class 2 NI. If your profits are low you do not pay Class 2 NI but by completing form CF411a you can get NI credits for the tax year which will increase your state pension entitlement.

Paying Class 1 National Insurance (NI) via your employment ensures you are maintaining your entitlements to state pension and benefits.

If your profits from fostering are above the small payments threshold you will also have to pay Class 2 NI. If your fostering profit is below the small payments threshold you do not have to pay Class 2 NI.

How Much National Insurance Do I Pay?

All rates quoted are for the 2018/ 2019 tax year.

If you are self-employed and your profits are £6,032 you will pay Class 2 NI. This is set at £2.95 per week. Class 2 NI is collected for the year via your tax return (annual cost of £153.40).

If your profits are over £8,424 when you complete your tax return, you will pay Class 4 NI, which is set at 9% on profits over £8,424. This is paid in addition to Income Tax.

Class 4 payments are not linked to your NI record and don’t count towards your benefits or pension entitlement.

If your profits are less than £6,032 you won’t have to pay for any National Insurance. However, you can opt to make Class 2 payment voluntarily when you file your tax return.

Fostering NI Allowances

Registered foster carers are also entitled to claim NI credits, which means the government credits your record with NI for a tax year. These credits enable you to cover any gaps in your NI 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 fostering NI allowances. This includes:

  • Calculating how much NI you have to pay, and when to pay it
  • Helping you claim carer credits
  • Dealing with correspondence from HMRC
  • Answering your questions about NI contributions