UK Nov 2025 Budget Implications

In the UK Budget on Nov 25th 2025 The Chancellor has made a change in the future for Non UK contributions to UK State Pension

It is obvious that this scheme is costing billions in future commitments to the UK government, so it is not surprising that changes were to be considered.

From this it appears that all existing applications with HMRC will still be valid and if Class 2 is adjudicated for gaps in years it will be allowable. Also, it appears that payments for annual Natl Insurance gaps at Class 2 will also be allowable where appropriate for the current year when it completes on 5th April 2026.

It says that from April 6th 2026 onwards that 10 years NI Contributions (rather than 3 years currently) will be required as a base to enhance the UK State Pension. I don’t believe this will impact many clients as they should have 10 yr + as a result of buying the allowed gap years.

For those on Class 2, this requires thought for the future years beyond 2026. Instead of paying apx £200 per annum to increase your UK State Pension Class 3 will cost apx £900 per annum after 2026.

Every year you contribute towards the max 35 year UK State Pension will raise the current value of your annual pension by appx £340pa (this is the current value which is index linked and will increase annually.) So for each annual apx £900 invested it will take apx 2.7 years in your retirement to earn this back (not accounting for any tax implications).

Since we do not offer any pension advice, only information, you may wish to consult with your pension or financial advisor on this.