All foster carers must register as self-employed, submit self-assessment tax returns and pay National Insurance. Although this might sound daunting, it’s actually a straightforward process and we offer you all the support you need.
As I got older, I just know it was something I wanted to do. I’d never look back.
You pay NICs to qualify for certain state benefits and the state pension. There are different types of NI, and these are known as ‘classes’. Which class of National Insurance you pay depends on your employment status and how much you earn. You usually stop paying NICs when you reach state pension age, even if you are being paid to foster. The only exception to this is if your earnings are above a certain profit threshold. Here are the different classes of NICs you might pay as a foster carer.
When you register with HRMC as self-employed, you will be registered for Class 2 NICs. However, you won’t have to pay Class 2 NICs if you have no taxable profit from fostering, or if your taxable profit (the amount over the threshold) is up to £6,365 (2019/20). However, you can opt to pay Class 2 NICs voluntarily. You might choose to do this because Class 2 NICs give you access to welfare support like maternity benefit, bereavement benefit and the state retirement pension. If you don’t pay it, you might lose access to these benefits. For 2019/20, Class 2 NICs were £3 a week.
NI credits count towards your National Insurance record. You can apply for a NI credit for each week you are approved as a foster carer. Do this at the end of each tax year by filling in form CF411A and submitting a letter from National Fostering Group to confirm that you were approved to be a foster carer for the tax year. Class 3 credits count towards the basic and additional state pension.
You will only have to pay Class 4 NICs if you go above a certain profit threshold from your self-employed foster care earnings. If you go above this threshold, Class 4 NICs are paid in addition to Class 2 NICs. For 2019/20 the rates of Class 4 NICs were:
As a self-employed foster carer who has reached state pension age, you won’t pay NICs. The only exception is if you are required to pay Class 4 contributions.
I love Carol because she is good at cooking my favourite food, I have my own bedroom and she makes me laugh.
You can call the National Insurance general enquiries helpline on 0300 200 3500 or take a look at HMRC’straining, support and development for foster carers. You can also get free advice from The Fostering Network. If you’ve been approved as a foster carer with us, you automatically get membership to the network, including access to the helpline on 0207 401 9582. Alternatively, you can email them.
If you need more information or support we are happy to discuss your NICs, so please get in touch. If you ask for a call back, an advisor from your local team will get in touch to explain more about how to become a foster carer, and answer any questions you have about foster care pay and self-employment.