If you have decided to work in another country, there are issues surrounding your National Insurance Contributions (NICs) that may influence your State Pension and other benefits.
It is not necessarily the case that everyone who works abroad stops paying NICs. In the EU and several other countries, British nationals must continue to pay their UK NICs.
Whether or not you contribute to NI depends on where and for how long you work abroad.
If the country you are working in does not have an agreement with the UK, you may be required to pay their national social security contributions. On top of this, you may wish to consider paying voluntary National Insurance.
This covers a gap in your NI contribution record and is vital if you wish to protect your right to claim benefits or State Pension, should you return to the UK.
Two types of NI contributions for the self-employed to consider
There are two types of NI contribution that self-employed individuals, who have moved abroad, should consider:
- Class 2 Contributions – These are fixed weekly payments made by self-employed people. Most make these payments as part of their Self-Assessment Tax bill. This might be done to ensure that you have enough qualifying years to get the full state pension.
- Class 3 Contributions – Class 3 is paid when you have gaps in your NICs record that you wish to fill. These gaps would normally make you ineligible for benefits or State Pensions. Class 3 is more expensive than Class 2 and are paid in monthly, quarterly or a one-off payment.
Things to think about before you make voluntary contributions
- You only need 35 qualifying years to receive the full State Pension, so even if you take a break, you still may be eligible to receive the full amount.
- NICs are non-refundable, so be sure that you will benefit from them before you make voluntary contributions.
- They do not always increase your State Pension amount. In fact, a higher State Pension amount might mean you pay more tax.
How to pay voluntary NI contributions whilst abroad
To pay voluntary NI contributions you must fill out an application form called CF83. The form will ask you about your details, which country you are going to be working in, and how you wish to pay.
You can pay with direct debit straight from your account and if the NI contribution rate changes HM Revenue & Customs (HMRC) will automatically deduct this from your account too.
Alternatively, you can use an agent to pay your voluntary contributions. They can do this by either direct debit or annual contributions.
To learn more about paying your National Insurance whilst working abroad, get in touch.
