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An image of a close-up of the Union Jack flag. Paying National Insurance as a UK expat

Should you be paying National Insurance as a UK Expat?

Some information in the article may be out of date. You can find a more recent version here.

In a fix with your NICs?

Ahoy Brits Working Abroad! If you want to check online your National Insurance Contributions Record, UK expats need to know that – direct from the British Government’s 2018 NIC/expat webpage ( www.gov.uk/national-insurance-if-you-go-abroad):“You might be able to pay UK National Insurance while you’re working abroad, depending on where you’re working and how long for.” The HMRC (Britain’s tax authorities) sees expats paying of NICs as an opportunity (rather than a burden) that UK citizens going abroad wouldn’t want to miss. For good reason! If UK citizens don’t make enough National Insurance Contributions, they might end up with no State Pension. But do you HAVE to pay NICs as a Brit expatriate worker? That’s the question. And the consensus is: Whilst living abroad, you do not have to pay National Insurance Contributions (NICs) – but you may need to in order to protect your UK State Pension, depending on how many payments you have already made. Remember you can claim your UK State Pension whether you remain an expat for the rest of your life or go back and live in Britain.

To NIC or not to NIC?

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. As a British expat, there’s no point in weakening your UK State Pension for the sake of a few NICs you could just pay and be done with. Seek professional and independent advice if you can; cross-border retirement planning is a priority area! If you’ve got a small budget for financial advice, this is one area well-worth prioritising in order to obtain some expert guidance. But first, why not do some digging yourself? Why not find out first everything that the UK Government knows about your NICs and your State Pension? Online NIC help:

Do UK expatriates generally make National Insurance Contributions (NICs)?

As an expat you may not automatically have to pay UK National Insurance after you leave the country (depending on your employment status and employer, for example), but it may be in your future financial interest to do so. It entirely depends on where an expat is with their State Pension: a) how many NICs made and b) how much they want to guarantee their UK State Pension when the time comes. Having a shortfall in your NI contributions may make a significant difference to your entitlement to a UK state pension, or any state benefits you could be entitled to should you return to the UK.

Can I make NIC payments when living abroad?

Yes, you can continue to make National Insurance contributions as an expat, though this can depend on where you’re working and for how long. For example, if you are working for a UK-based employer who sends you overseas for a limited period of time (up to two years), you may be required to continue making NIC’s while you work abroad. In other circumstances, you will have to make voluntary NI contributions as an expat if you want to remain eligible for your UK State pension. The HMRC website offers a comprehensive list of the rules that apply to making NICs from abroad, depending on whether you are outside or inside the EU and EEA, for example. It is best to check your specific employment circumstances according to the HMRC guidelines for expats.

Important: UK State Pension Top Up Scheme

In 2016, changes to the UK State pension meant that, in order to qualify for the full amount, savers needed 35 years of full NI contributions – compared to the 30 years under the old scheme. This has had an impact on those who are close to retirement age. State pension top-ups were designed to allow savers to fill in any gaps in their National Insurance Contributions. The top-up scheme allows you to pay a lump sum, of no more than £741, on years where there was a shortfall, or for any years you spent outside of the UK, to qualify for the full UK state pension. This has been a particularly valuable scheme for expats, and for those who may have taken time out from their careers to look after children. You can backdate missed payments for up six years of missed contributions. To check if you have any gaps in your National Insurance record you can visit the Government’s check your State Pension service. This gives you information about how much you need to pay, and how long you have to make the payment. As an expat you are entitled to claim your UK state pension whether you return to the UK for your retirement or not.

Voluntary NI contributions from outside the UK

If eligible, you can make voluntary NIC contributions from outside the UK that will count toward your UK state pension as well as certain benefits and allowances you may be entitled to should you return to the UK. You can check your eligibility here. To start making National Insurance payments from outside the UK, you can apply to HMRC using form CF83, or visit the HMRC website for more detailed information on how to apply for social security as an expat as well.

NIC and UK State pension advice for expats

At Holborn, we have already helped thousands of expat customers around the world to claim their UK state pension. Contact your Holborn financial advisor today to start getting practical with your retirement planning.

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