British expats are being urged to act fast over April 5 UK pension deadline.
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UK expats are being urged to act fast or risk missing out on tens of thousands of pounds in guaranteed pension income for life.
A little-known HMRC deadline is fast approaching – and for those with gaps in their National Insurance record, failing to act before April 5 2025 could be a costly mistake.
Right now, a rare window of opportunity is open to backdate missing contributions all the way to 2006 – but that window is closing for good in a few days.
Why the UK pension rush?
Under normal rules, Brits can only backdate six years of missing NI contributions. But thanks to a temporary concession, that’s been extended to cover up to 19 years – back to April 2006.
Once the deadline passes, this option vanishes, and with it the chance to significantly boost your UK State Pension – potentially adding thousands to your retirement income.
“Securing your UK State Pension might not be top of mind, but failing to act now could cost you tens of thousands of pounds in retirement income,” warns Chris Ball, CEO of Dubai-based financial advisory firm Hoxton Wealth, in an exclusive interview with Euro Weekly News.
How much pension money are we talking?
The full UK State Pension currently pays £221.20 per week – that’s £11,502 per year, protected by the triple lock guarantee, which means it rises annually with inflation, wage growth or 2.5% – whichever is highest.
If you’ve got 35 qualifying years of contributions, you get the full whack. With less than 10 years, you get nothing at all. In between, you’ll get a pro-rata amount.
There are some people who may have a higher entitlement, that is because they also paid into the “Additional State Pension”. The ability to do this was stopped in 2016 so very few people are likely to have it.
“But here’s the issue,” continues Ball, “if you don’t have enough qualifying years of National Insurance contributions, you could miss out entirely. You need at least ten years of contribution to qualify for any UK State Pension; you need 35 years of contributions to receive the full amount, and many UK expats have significant gaps in their National Insurance record due to living and working abroad.”
And if you’ve lived and worked abroad, like many expats, there’s a good chance your NI record has gaps.
‘If you’re short by 20 years,’ explains Ball, “you could be missing out on over £62,000 in retirement income. If a private firm offered those returns, people would be queuing up. But because it’s a government pension, most expats ignore it.”
Class wars: Which NI contributions should you pay?
There are two types of voluntary NI contributions:
- Class 3 – the default and more expensive option, costing around £900 per year.
- Class 2 – cheaper at just £164 per year, but only available if you qualify.
To qualify for Class 2, you must:
- Have lived or worked in the UK for at least three years before moving abroad, and
- Be employed or self-employed overseas.
To qualify for Class 2, you must apply for approval from HMRC if you:
lived or worked in the UK for at least three years before moving abroad and have been employed or self-employed while living overseas. Without this explicit approval, you will be automatically placed into Class 3, the higher rate.
What about tax in Spain?
If you’re living in Spain, remember: the UK State Pension is taxable in Spain, not the UK (unless you’re still a UK tax resident).
That means you must declare it as income to the Spanish tax authorities. It’s taxed at your local Spanish rate – which can be quite steep depending on your region and overall income.
Also, voluntary NI contributions are not tax deductible in Spain under normal circumstances.
What to do next
If you’re a UK expat and want to maximise your pension:
- Check your NI record at gov.uk/check-national-insurance-record
- Use the State Pension forecast tool
- Contact HMRC to check Class 2 eligibility
- Apply for Class 2 approval if you qualify
- Make your payment before April 5, 2025
Final word on UK pensions for people living in Spain
The ability to backpay nearly two decades of NI contributions is not something that comes around often, and with the deadline looming, the clock is ticking for British expats to secure their slice of guaranteed, inflation-linked retirement income.
As Chris Ball puts it: “This is one of the best financial safety nets available. Don’t ignore it.”
Need help figuring it all out? Speak to a UK-qualified financial advisor familiar with expat pensions and Spanish tax law.
This article is an exclusive interview with Chris Ball of Hoxton Wealth for Euro Weekly News.
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