ProACT Sam Orgill outlines Advent of Negative UK Budget Changes for Expats
NATIONAL INSURANCE contributions by Expats qualifies and credit towards a UK State Pension while Living and Working Abroad.
The chancellor at the UK advent budget announced she didn’t want UK Expats to benefit from a UK state pension without paying income tax in the UK.
So she has introduced simplification legislation meaning that national insurance CLASS 2 contribution rate stops at the 5th of April 2026.
From the next tax year national insurance contributions to credit towards a UK State Pension can be made based upon UK earnings as a sole trader, contractor or employee.
Alternative remaining for UK Expats Living and Working Abroad remains as voluntary contributions for NATIONAL INSURANCE at CLASS 3.
This is a tax rise by another name.
The CLASS 2 rate is around £300 a year while the class 3 rate is around £900 a year.
At the class 3 rate each year the NI contribution generates enough state pension to get a return on the in 3 State Pension tax years.
This still remains a good way to save towards retirement, but now is a less attractive option for Expats living abroad
REVIEW
Anyone currently paying national insurance contributions will receive a notification and update the index payment rates in the spring of 2026.
If you don’t want to continue with class 3, then you will need to advise them.
If you do continue with an increase from the class 2 to 3 then you may choose to change the method of payment to monthly or quarterly to move the payments.
WHAT ABOUT EXISITING CLAIMS?
In part this budget tax hike is reaction to the struggles of the department trying to implement the 10 year catch-up option offered to UK citizens since 2016 when state pension was reduced in value and also to process existing applications for national insurance contributions by Expats Living and Working Abroad
ProACT still have applications dating back three years or more. Any application received before April 25 will be offered the full 10 year catch up.
Any existing application could be assessed and offered the opportunity to pay class two or class three for the missing years up to 17 with the current tax year 24/25.
This offers the lowest cost opportunity to catch up in your state pension credits in the UK.
We continue to push applications and have them processed as existing applications for clients
If you’re currently paying class 2 be aware that the rate you must pay will increase from April 26
If you want to review the organisation of your tax planning to adapt for UK State Pension and NATIONAL INSURANCE contributions please contact us for a free consultant view you can book online or email to arrange.
There are work arounds that can work for you if Living and Working Abroad.
Any existing application submitted over the last three years and that has not yet been assessed: ProACT have resubmitted since the summer of 2025 and continue to press to get an assessment as soon as possible.
ProACT Sam Orgill
www.proactpartnership.com/contact-us
www.proactpartnership.com
Cyprus Tel: +357 26 819 424
Global Tel: +44 1753 26 0010