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 initial details about the upcoming NIC changes.

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 generally reached with.  

'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 current (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 tax year 2026/27, 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, some not qualifying under the new rules may conceivably be prevented from achieving 10 ‘qualifying years’ and therefore left without any UK state pension entitlement, despite having made NI contributions.  It is hoped that the transitional rules might offer some relief here.

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

HMRC notes that further guidance and details of transitional arrangements will be published by at a later date.  It is also understood that HMRC will write to those who it believes are affected, 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
• Apply to make Class 3 contributions from tax year 2026/27. 

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 National Insurance 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 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 contact your usual Crowe contact.