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    National Insurance

    National Insurance for UK Expats

    Many UK expats ask if they should be contributing to National Insurance when living abroad?

    Wherever you are based as a British expat, you might be missing out if you are not already voluntarily winging NICs back to the UK. As well as your eligibility for the UK State Pension, you need to consider both what NIC rules apply according to the country in which you are expatriate as well as how the duration of your stay abroad affects your National Insurance Contribution status.

    To qualify for a full UK state pension, you will need 35 years for the full years of contributions.  A minimum is 10 years is required to receive any pension, any number of years contributions between this will be paid pro-rata.

    The UK basic state pension is intended to provide an individual with a basic level of income in retirement. It is funded on a ‘pay as you go’ basis. You can claim the UK state pension from 66 years old. The age threshold is scheduled to rise to 67 between 2026 and 2028 and is expected to increase to 68 from 2037.

    As an expat, you’re probably not making contributions as you will not be earning employed or self-employed income in the UK (property income does not count). To ensure that you achieve the 35 years of contributions and receive a full basic state pension, you can make voluntary a contribution that add to these ‘years’

    These contributions are accumulated through different ‘Classes’.

    • Class 1 for UK employees
    • Class 2 for the self-employed
    • Class 3 to make voluntary contributions

    Check your state pension contributions

    Check to see if there any gaps in your contribution record. To do this, you will need to complete the below BR19 form available from Department of Work and Pensions (DWP) website. Upon receipt they will calculate what your pension will be a state retirement age.You can fill gaps in your payment record of National Insurance contributions for last six tax years.

    National Insurance Contributions as an UK Expat

    You may continue paying UK Voluntary National Insurance contributions provided specific conditions are satisfied and build up these years. For an expat only Class 2 and 3 National Insurance contributions are most relevant.

    One of the following conditions must be fulfilled in case you want to pay voluntary national insurance contributions whilst living abroad.

    • You must have spent a constant three-year period in the UK prior to making your payments.
    • Before going abroad, you paid National Insurance contributions for a period of three or more years.

    Classes of contribution for UK Expats?

    Class 2

    If you are either self-employed or employed overseas, then you may be able to pay voluntary class 2 National Insurance contributions. For this class, you must meet either of the following conditions:

    • “Ordinarily” self-employed or employed right before going abroad.
    • “Ordinarily” self-employed/employed but got unemployed before going abroad (Here, unemployed means that you are registered as an unemployed person at the Department for Work and Pensions who is searching for work).

    Extra benefits of class 2 contributions:

    • These payments make contribution to your State Pension
    • You enjoy entitlement to the Employment and Support Allowance (formerly known as Incapacity Benefit) and bereavement benefits when you return to the UK.

    Current cost of class 2: £3.05 per week

    Class 3

    Class 3 contributions work for those who are either not entitled to class 2, have gaps in payment record for a tax year, or are unemployed while living abroad.

    Compared to class 2 National Insurance contributions, class 3 contributions offer fewer benefits. For instance, you are not able to enjoy the Employment and Support Allowance on your return to the UK or bereavement benefits

    Current cost of class 3: £15.40 per week

    You can use a form CF83 “Application to make National Insurance Contributions abroad” for this purpose. Visit the following link to find the form. After filling in the form, submit it to the National Insurance Contributions Office

    How to Pay Voluntary Contributions while Living Abroad

    You can use a form CF83 “Application to make National Insurance Contributions abroad” for this purpose. Visit the following link to find the form. After you complete the form, submit it to the National Insurance Contributions Office

    You can use either of the following ways to pay voluntary National Insurance contributions.

    • Nominate an agent to make your payments.
    • Make annual payments.
    • Pay through Direct Debit after every 4-5 weeks.

     

     

    If you would like further information on this or any other financial planning topic, contact advice@singaporeexpatadvisory.com or Tel. +65 9342 8781

    General Information Only This article should not be construed as an offer, solicitation of an offer, or a recommendation to transact in any products (including funds, stocks) mentioned herein. The information does not take into account the specific investment objectives, financial situation or particular needs of any person. Advice should be sought from a licensed financial adviser regarding the suitability of the investment

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