Changes to Voluntary National Insurance for people living and working abroad

In her Budget speech on 26 November 2025, the Chancellor indicated changes to voluntary National Insurance Contributions (NIC) for individuals living and working overseas. See HMRC's current details about the upcoming NIC changes, which have been updated in March 2026.

Why it matters

To qualify for the new UK State Pension, you need:

• A minimum of 10 ‘qualifying years’ to achieve the minimum pension entitlement.
• 35 ‘qualifying years’ for the full entitlement. 

'Qualifying years' come from things such as:

• UK Employment/self-employment income above UK NIC thresholds.
• Voluntary UK NI contributions.

Voluntary NI contributions can help to prevent those living and working abroad from suffering gaps in their UK contribution record. 

Current rules for those living and working abroad

To date, those meeting the following conditions could apply to pay voluntary ‘Class 2’ NIC from abroad, and continue to add ‘qualifying years’ to their UK record at an annual cost of around £180:

• Lived in the UK for a continuous three-year period
• Paid sufficient UK NIC to achieve three ‘qualifying years’
• Were ordinarily employed/self-employed in the UK before moving abroad to work.

Those not qualifying for Class 2 treatment could alternatively make ‘Class 3’ voluntary contributions at the higher cost per ‘qualifying year’ of around £900.

Announced changes

The 2025/26 tax year is the final year in which those living and working abroad will be able to make voluntary Class 2 NI contributions.  Existing Class 2 NIC voluntary rate arrangements will lapse on 5 April 2026.

To continue making UK voluntary contributions from the 2026/27 tax year, those living and working abroad will need to make a new application (under Class 3 i.e. at the higher rate), and the application conditions will be tighter, namely requiring applicants to have either:

• Lived in the UK for 10 consecutive years
• Paid at least 10 years of NI contributions while in the UK. 

As well as increasing the annual cost of voluntary contributions, this extended period also risks leaving some unable to achieve 10 ‘qualifying years’ (and therefore left without any UK state pension entitlement), despite having made NI contributions. Updated guidance seems to offer an olive branch here, with the previous ‘three-year limit’ potentially retained for those who:

• apply to pay NI voluntary contributions for 2024/25 or 2025/26 on or before 5 April 2026
• pay those voluntary NI contributions on or before 5 April 2027
• apply to pay Class 3 NI contribution for 2026/27 on or before 5 April 2027.

HMRC has also confirmed that:

• those already paying Class 3 contributions from abroad need not reapply
• the new changes will not affect ‘qualifying years’ already built up by April 2026.

Next steps

It is hoped that HMRC will issue further guidance at a later date.  It is also understood that HMRC will write to those who it believes are affected in July 2026, although receipt of that letter will presumably depend on the reliability of your local postal system.

Action will be required by those currently making voluntary contributions at the Class 2 rate to:

• Decide whether they wish to continue adding ‘qualifying years’ at the higher Class 3 rate
• Check whether they qualify to do so under the new rules or can benefit from the transitional rules
• Apply to make Class 3 contributions from tax year 2026/27. 

For those not paying any voluntary contributions, there is a small window of opportunity until 5 April 2026 to apply to make voluntary contributions under current rules, i.e. requiring only three years of continuous UK residency of qualifying NI contributions. After 5 April 2026, this increases to 10 years.

Furthermore, those involved in managing global mobility would be wise to check their current process and policies. Many employers have taken this responsibility on for their employees. It will come with higher costs going forward.  It should not be forgotten that voluntary NIC payments made by employers are likely taxable in other countries as well.

Conclusion

The upcoming changes to voluntary NI contributions represent a significant shift for individuals living and working abroad. From April 2026, the end of Class 2 contributions and the introduction of stricter eligibility criteria for Class 3 contributions will increase costs and might limit access for many. Those affected should act promptly to review their position, assess eligibility under the new rules, and plan for the financial and compliance implications.

If you would like more information on this topic, please do not hesitate to get in touch with your usual Crowe contact.