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Although liability to UK National Insurance often continues when an employee goes on overseas assignment, this isn’t always the case, particularly if there is a change of employer or the assignment is not short term. In situations where UK National Insurance ceases, UK contributions can be paid on a voluntary basis.
Voluntary class 2 contributions are £3.45 a week and preserve entitlement to pensions, contribution-based employment and support allowance, maternity allowance and bereavement support. However, assignees are only eligible to pay class 2 contributions if they are working in the UK immediately prior to leaving on assignment and have either lived in the UK for at least three consecutive years prior to leaving or have paid at least three years of contributions.
If not eligible for class 2, assignees can pay the more expensive class 3 contributions (at £17.45 a week), although these are of limited benefit in that they only count towards pension entitlement.
Are contributions needed?
Before applying to make voluntary contributions, however, the assignee (and the employer if they are absorbing the cost) should consider whether voluntary contributions are actually needed.
An assignee may have already built up a sufficient contribution record or may be entitled to ‘credit’ for social security paid overseas. See, for example, article 7 of the EU Protocol on Social Security Co-ordination, which requires the UK to take into account periods when social security is paid in other European Union states when determining eligibility for UK benefits.
