Can I Pay Voluntary NI Contributions If I Live Abroad?

This is a common question we get from digital nomads and expats. If you're living abroad and wondering whether you can still pay National Insurance (NI) contributions, the answer is yes, in many cases.

Why Pay Voluntary NI contributions while living abroad?

First of all – why would you want to voluntarily pay national insurance contributions as an expat?

Answer – this will allow you to keep your NI record abroad, so you qualify for the UK state pension.

You need 10 years’ worth of NI contributions to qualify for the minimum UK state pension.

The number of years required for the maximum state pension is 35 years.

If you spend a few years outside the UK you may want to continue your contributions so you can still qualify for the full 35 years.

You get a choice to pay either class 2 or class 3 national insurance. Class 2 is £182 for the year and class 3 is £907.40 (so if you are eligible to pay class 2, it’s a lot cheaper!)

There is usually a time limit of 6 years, meaning voluntary contributions normally have to be paid within 6 years of the end of the tax year to which they relate.

If you're an expat or digital nomad wanting to keep your UK pension record abroad, keep on reading!

Eligibility Rules For Voluntary NI Contributions

To be eligible, you must have either:

· Previously lived in the UK for 3 years in a row, or;

· Paid at least 3 years of national insurance contributions.

To be eligible for class 2, the following must also be true:

· You must have worked in the UK immediately before leaving.

· You must be working abroad (or did while you were abroad).

If these do not apply to you, you still may qualify if:

· You previously lived in an EU country, Gibraltar, Iceland, Liechtenstein, Norway, Switzerland or Türkiye for 3 years in a row.

· You paid 3 years of social security contributions in an EU country or any of the above named countries.

You must have also been previously subject to UK legislation because you were employed or self employed.

How To Apply For Voluntary NI Contributions

You can apply by post or online via the HMRC website. You’ll need the following details:

· Full name

· Date of birth

· Date you left the UK

· National insurance number

· Address in the UK / abroad

· Details of your employment before leaving UK

· How long you lived or plan to live abroad

· Details of your work abroad

Should You Pay Voluntary NI Contributions?

Well, that depends on your current circumstances, but it’s probably best to if you predict you will have missing years before you are eligible for the state pension.

The state pension is currently £11,960 per year. So for the cost of £182 or £907 per year – this seems like a good deal!

Other Ways To Protect Your State Pension While Abroad

Here are two other ways you could still keep your NI record to have a full digital nomad UK pension.

If you are still running a UK limited company and are living / tax resident overseas, consider paying yourself a small salary above the LEL (lower earnings limit) of £6,396 which will give you your NI contribution without incurring a tax liability.

If you do not have a UK limited company but own a property in the UK, consider transferring the property to a UK limited company and take a salary from the company above the LEL of £6,396. There are other capital gains tax implications to consider with this so please seek financial advice first.

If you’re unsure whether you’re eligible, or want help getting this sorted - email us at info@blueedgeaccountants.co.uk and we can help you out with it.

Thanks for reading.

Tom Luckett FCCA

Director, Blue Edge Accountants