April is going to be a key month for British pensioners living in Spain. The good news is that the state pension will increase by 4.8 per cent from April 2026 – that’s an extra £400 to £575 a year for most retirees after Spanish tax and exchange rate fluctuations. But, as a result of the last UK budget, while rising inflation and cost of living in places like Mallorca are already making pensioners feel the squeeze, pension changes announced in the budget to could tighten that squeeze for many.
The British government has announced it will be removing access to class 2 voluntarily national insurance contributions (VNICs) for expats to prevent them from claiming the UK state pension cheaply. It also raises questions for those holding Individual Savings Accounts (ISAs) while living overseas, prompting some expatriates to review how they structure future repatriation plans.
The change will come into effect from 6 April this year, alongside an extension to the initial residency or contributions requirement to 10 years. The government said the move would “put an end to those living abroad being able to buy cheap access to a UK state pension.” Expats can currently claim UK state pension by paying class 2 VNICs to fill in gaps in their record. You must generally have been employed or self-employed in the UK before leaving and have lived in the UK for at least 3 years to qualify.
But from next April, UK nationals living abroad will generally only be able to pay the more expensive class 3 VNICs to build their state pension record, and only if they meet the new 10-year initial residency/contributions requirement. The British The government said the move would “put an end to those living abroad being able to buy cheap access to a UK state pension.”
Expats can currently claim UK state pension by paying class 2 VNICs to fill in gaps in their record. You must generally have been employed or self-employed in the UK before leaving and have lived in the UK for at least 3 years to qualify. But from April, UK nationals living abroad will generally only be able to pay the more expensive class 3 VNICs to build their state pension record, and only if they meet the new 10-year initial residency/contributions requirement.