Policy paper

Voluntary National Insurance contributions abroad from 6 April 2026

Published 16 March 2026

Who is likely to be affected

Individuals who pay or plan to pay voluntary Class 2 or Class 3 National Insurance contributions for periods working or living outside of the UK.

Employers who pay or plan to pay for voluntary National Insurance contributions on behalf of employees who are working outside of the UK.

This does not affect those paying voluntary National Insurance contributions for periods working or living outside of the UK before 6 April 2026.

General description of the measure

This measure restricts access to voluntary National Insurance contributions for individuals living or working abroad.

This measure removes access to pay voluntary Class 2 National Insurance contributions for periods abroad from the start of the 2026 to 2027 tax year and onwards, for employees and most self-employed individuals.

The only individuals who will be able to pay voluntary Class 2 National Insurance contributions in respect of time spent working outside of the UK (2026 to 2027 tax year and onwards) will be self-employed individuals who are treated as if they were gainfully self-employed in the UK under a relevant international social security agreement (SSA) and volunteer development workers (VDWs) paying the special VDW rate of Class 2 National Insurance contributions.

The measure also changes the conditions for new applications to pay Class 3 National Insurance contributions from the start of the 2026 to 2027 tax year and onwards.

From 6 April 2026, individuals submitting new applications to pay Class 3 National Insurance contributions in respect of periods abroad from 2026 to 2027 tax year and onwards will need to have lived in the UK for at least 10 continuous years or have built at least 10 qualifying years on their National Insurance record (not including voluntary Class 2 or Class 3 National Insurance contributions paid for periods abroad, except for those paid under a relevant SSA or by a volunteer development worker).  

Policy objective

These changes promote fairness by ensuring that individuals building a State Pension from outside the UK have a sufficient link to the UK and are paying a fairer price to do so.

Background to the measure

The measure was announced at Budget 2025.

Detailed proposal

Operative date

This measure will take effect from 6 April 2026. The changes apply prospectively and do not affect customers’ ability to pay voluntary Class 2 or Class 3 National Insurance contributions for tax years before 2026 to 2027.

The new 10‑year qualifying criteria for paying Class 3 National Insurance contributions will only apply to new applications. Existing Class 3 abroad customers can continue paying Class 3 National Insurance contributions without re‑applying or needing to meet the new criteria.

Existing voluntary Class 2 National Insurance contributions customers will be given the opportunity to apply to pay Class 3 National Insurance contributions without needing to meet the new 10‑year criteria. To be eligible under the 3‑year criteria, existing voluntary Class 2 National Insurance contributions customers meeting relevant conditions must submit an application to pay Class 3 National Insurance contributions abroad before 6 April 2027. HMRC will contact these customers in July 2026 regarding the closure of their Class 2 liability and the option to start paying Class 3 National Insurance contributions.

Read further information on the transitional rules for existing voluntary Class 2 and Class 3 payers.

For all other cases, from 6 April 2026, applications to pay Class 3 National Insurance contributions for periods abroad from 2026 to 2027 tax year onwards will be assessed against the new 10‑year criteria.

Current law

Regulation 147, Social Security Contributions Regulations 2001.

Proposed revisions

Regulation 147 will be amended to:

• remove the provision that permits payment of voluntary Class 2 National Insurance contributions for periods abroad
• increase the qualifying conditions for entitlement to pay Class 3 National Insurance contributions while abroad, from three years’ residence in UK, or three years’ contributions including National Insurance contributions paid whilst abroad, to ten years’ residence in the UK, or ten years’ contributions (not including voluntary Class 2 and Class 3 National Insurance contributions paid for periods abroad, except for those paid under a relevant SSA or by a volunteer development worker)
• provide a transitional exemption for existing voluntary Class 2 and Class 3 National Insurance contributions abroad customers to not be subject to the new 10-year qualifying conditions

Summary of impacts

Exchequer impact (£m)

2025 to 2026	2026 to 2027	2027 to 2028	2028 to 2029	2029 to 2030	2030 to 2031
Nil	-5	5	10	10	15

These figures are set out in table 4.1 of Budget 2025 and have been certified by the Office for Budget Responsibility. More details can be found in the policy costings document published alongside Budget 2025.

Economic impact

This measure is not expected to have any significant macroeconomic impacts.

Impact on individuals, households and families

At Budget 2025, the removal of the ability to pay voluntary Class 2 National Insurance contributions abroad was expected to impact approximately 46,000 individuals currently paying voluntary Class 2 National Insurance contributions abroad, who will no longer be entitled to do so. At 2026 to 2027 tax year National Insurance contributions rates, paying Class 3 National Insurance contributions will cost £767 more per year than voluntary Class 2 National Insurance contributions.

This will not affect customers paying voluntary Class 2 National Insurance contributions abroad where they are treated as being gainfully self-employed in the UK under a relevant SSA or volunteer development workers paying the special rate of voluntary Class 2 National Insurance contributions.

The removal of the ability to pay voluntary Class 2 National Insurance contributions will reduce entitlement to some Class 2 National Insurance contributions linked working age contributory benefits, as Class 3 National Insurance contributions only build entitlement to State Pension.

New Style Employment and Support Allowance (ESA) is an earnings replacement benefit for working age people who are unable to work due to a health condition or disability.

Class 2 National Insurance contributions are one way that individuals can build entitlement to claim New Style ESA. This means that from the 2026 to 2027 tax year and onwards, individuals working abroad (other than those covered by a relevant SSA or volunteer development workers) won’t be able to build entitlement to New Style ESA by paying voluntary Class 2 National Insurance contributions for their time spent outside of the UK.

Individuals returning to the UK who have a disability or health condition that affects how much they can work may be eligible to claim other benefits such as Universal Credit to help with their living costs.

Class 2 National Insurance contributions are also one way to build entitlement to Bereavement Support Payment (BSP) — a payment made to a spouse or civil partner in the event of an individual’s death. BSP can also be paid to cohabitees with dependent children.

However, given that an individual only needs to have paid less than a year’s worth of Class 1 or Class 2 National Insurance contributions in their working life since 1975 in order for their survivor to be eligible for BSP we think there is low risk of anyone losing access to BSP as a result of this policy change.

While Class 2 voluntary National Insurance contributions can also be used by self-employed individuals to increase their Maternity Allowance (MA) entitlement, the removal of access to voluntary Class 2 National Insurance contributions in respect of periods working abroad will not prevent any customers from being able to claim the full MA.

To qualify for MA, self-employed claimants are required to have registered with HMRC as gainfully self-employed in the UK for at least 26 out of the 66 weeks prior to the baby’s due date.

Any self-employed claimant wanting to maximise their MA entitlement through Class 2 National Insurance contributions will continue to be able to do by paying Class 2 National Insurance contributions for at least 13 of the 26 weeks that they were gainfully self-employed in the UK.

The new qualifying criteria to pay Class 3 National Insurance contributions will also prevent some individuals from building State Pension entitlement whilst abroad. The new criteria will only apply to new applications to pay Class 3 National Insurance contributions in respect periods abroad from the 2026 to 2027 tax year and onwards, submitted from 6 April 2026.

Existing Class 3 National Insurance contributions payers will be able to carry on paying Class 3 National Insurance contributions without needing to re-apply or meet the new qualifying criteria, and existing voluntary Class 2 National Insurance contributions payers will be given the opportunity to apply to pay Class 3 National Insurance contributions without needing to meet the new qualifying criteria.

Where an individual is not able to pay Class 3 National Insurance contributions for periods abroad and not able to continue building their National Insurance record through other National Insurance contributions or credits in the UK they will not be able to increase their State Pension entitlement.

Both the Class 2 and Class 3 measures are expected to have no impact on individuals’ experience of dealing with HMRC as there will be no substantive changes to their tax administration processes. In certain cases there may be impacts on family stability if individuals choose to alter their plans in relation to retirement or working abroad.

Equalities impacts

An individual may be affected by this measure regardless of their protected characteristics. The equalities impacts reflect the composition of the population paying voluntary Class 2 and Class 3 National Insurance contributions for periods abroad. If a protected group is overrepresented in this population, then it will be disproportionately impacted.

The following groups have been identified as being overrepresented within the population affected by the measure:

• males make up an estimated 62% of the voluntary Class 2 National Insurance contribution abroad paying population compared to around 50% of the UK adult population
• the population paying Class 3 National Insurance contributions abroad is estimated to have a broadly even sex ratio, however as some voluntary Class 2 National Insurance contributions payers may switch to making Class 3 payments, this may result in an overrepresentation of males in the Class 3 National Insurance contributions abroad population
• those aged 50 to 69 make up an estimated 72% of the Class 3 National Insurance contributions abroad paying population compared to around 30% of the UK adult population
• those aged 40 to 69 make up an estimated 90% of the voluntary Class 2 National Insurance contributions abroad paying population compared to around 46% of the UK adult population — those aged 50 to 59 are particularly overrepresented at 41%, compared to around 17% of the UK adult population

HMRC does not hold data on the other protected characteristics of individuals paying voluntary National Insurance contributions for periods abroad and therefore cannot make an assessment of the impacts on those with shared protected characteristics.

Administrative impact on business including civil society organisations

This measure is expected to have a negligible administrative impact on businesses or civil society organisations.

Businesses or civil society organisations who choose to pay for Class 3 National Insurance contributions on behalf of their employees working outside of the UK will need to pay an additional £767 per year (2026 to 2027 tax year rates) compared to if they were paying for voluntary Class 2 National Insurance contributions. Charities and development organisations that choose to pay the special rate of Class 2 voluntary National Insurance contributions for volunteer development workers (£6.45 per week at 2026 to 2027 tax year rates) will continue to be able to do so.

The increased upfront eligibility criteria will mean that some businesses or civil society organisations will not be able to offer to pay for Class 3 National Insurance contributions where employees working outside of the UK do not meet the new 10-year criteria.

One-off costs could include familiarisation with the policy changes, but we do not anticipate any ongoing costs. The measure is expected to have no impact on business or civil society organisations’ experience of dealing with HMRC as the application process remains the same.

Operational impact (£ million) (HMRC or other)

HMRC will need to make changes to IT systems to implement the measure. These changes are anticipated to cost in the region of £0.7 million. The operational impacts on HMRC are expected to be relatively small.

Other impacts

Other impacts have been considered and none have been identified.

Monitoring and evaluation

Consideration will be given to monitoring this measure through information collected from CF83 applications

Further advice

If you have any questions about this change, please contact HMRC’s National Insurance contributions policy team at nics.policy@hmrc.gov.uk.

Declaration

Torsten Bell MP, Minister for Pensions, has read this tax information and impact note and is satisfied that, given the available evidence, it represents a reasonable view of the likely costs, benefits and impacts of the measure.