National Insurance for foster carers

Class 2 National Insurance provides foster parents with access to a range of state benefits, including;

• Basic State Pension – so you can claim your basic state pension once you reach retirement age.
• Bereavement Benefits – if you take a break from fostering after your husband, wife or civil partner has died.
• Maternity Allowance – if you decide to take some time out of fostering while you expand your own family.
• Contributory Employment Support Allowance (ESA) – if you are sick and not able to foster as a result.

However, your benefits may be affected if there are gaps in your National Insurance record, which is why you may want to decide to make voluntary contributions to your Class 2 National Insurance. This works out at around £2.95 per week and buys you into a full year of state pension and benefits.

If you decided to pay voluntary contributions, you will pay once a year with your tax bill. If you haven’t paid it but would like to, you’ll need to get in touch with HMRC directly, as they will not chase you for this.

No, you’ll automatically be registered for Class 2 National Insurance contributions once you’re registered as self-employed.

Foster carers who decide not to pay Class 2 National Insurance voluntarily may have the option to claim for National Insurance Credits for carers. However, to opt-in for these credits, your profitable income will need to be below the earnings threshold.

You can apply for National Insurance credits for parents and carers online or by post. You will simply need to fill in a form and submit a letter from your fostering agency on headed paper confirming that you are a foster carer. This adds one year to your National Insurance contributions record. You will need to re-apply every year for your National Insurance credit to be applied to your record.

However, you wouldn’t want more than half of your total National Insurance record to be made up from credits, as this could affect your benefit entitlements. Don’t forget, you may have used credits to cover the gaps in your contributions record, if you had time off work to look after your own children. We’d advise you seek advice from an accountancy firm like Williams Giles to work out what’s best for you.

You’ll need 35 qualifying years to get the full new State Pension.

You can make back payments of Class 2 National Insurance for up to six years previously, however, we’d recommend speaking to an advisor before making a decision, as you may reach the qualifying number of years before retirement to be entitled to a full state pension.