Budget 2025: Voluntary class 3 and class 2 national insurance contributions

SnowMan

https://assets.publishing.service.gov.uk/media/6926eb102a37784b16ecf525/E03444720_Budget_2025_Web_Accessible.pdf

2.80 The government is closing loopholes in current Voluntary National Insurance contributions (VNICs) rules that allow those with a limited connection to the UK to build UK State Pension entitlement at a cheaper rate whilst overseas. To fix the most unfair elements of these rules, the government is removing access to the cheapest Class 2 VNICs for individuals abroad and increasing the initial residency or contributions requirement for VNICs to 10 years. The government is also launching a wider review of VNICs, with a call for evidence to be published in the new year.

4.118 National Insurance contributions re-rating – The government will increase the Lower Earnings Limit (LEL) and the Small Profits Threshold (SPT) by the September 2025 CPI rate of 3.8% from 2026-27. For those paying voluntarily, the government will also increase Class 2 and Class 3 NICs rates by September CPI of 3.8% in 2026-27. The LEL will be £6,708 per annum (£129 per week) and the SPT will be £7,105 per annum. The main Class 2 rate will be £3.65 per week, and the Class 3 rate will be £18.40 per week. The government will legislate for this measure in affirmative secondary legislation in early 2026 as part of the annual setting of National Insurance contributions limits and thresholds, as is standard practice.

119 Voluntary National Insurance contributions (NICs) abroad – From 6 April 2026, the government will remove access to pay voluntary Class 2 NICs abroad and increase the initial residency or contributions requirement to pay voluntary NICs outside of the UK to 10 years. These changes will be made via secondary legislation laid before Parliament ahead of April 2026. The government will also launch a wider review of voluntary NICs with a call for evidence in the new year.

JoeCrystal

Excellent news!

molerat

I do hope that means that voluntary class 2 will be removed altogether, there is no justification for voluntary to be set at more than one rate.

sammyjammy

We need more changes like this!

BrilliantButScary

 Not before time!

QrizB

It has seemed a little odd that someone living and working overseas could accrue UK SP qualifying years at lower cost than the same person would if they were living and working in the UK.

Class 3s are still a decent deal.

p00hsticks

The words 'horse bolted' and  'stable door' spring to mind, but pleased to hear it......