UK Autumn statement: are there changes for Britons living in France?

We look at UK state pension top-up and lump sums and news that the UK will create a form of ‘Baccalaureate’

Pension rule changes next year will still allow top-up payments into a UK pension
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The Connexion has reviewed the ‘Autumn Statement’ from the UK chancellor (finance minister) for changes that may affect the many Connexion readers who have links to the UK such as pensions, National Insurance contributions and close family who live there.

One of the changes announced relates to voluntary National Insurance Contributions (NICs), and we have looked to see if this will affect people who ‘top up’ their UK state pensions from France.

UK National insurance contributions (NICs)

The UK has announced that it is stopping the ‘Class 2 NICs’ system for small businesses - but this will not affect people who ‘top-up’ their UK State pension record from overseas.

The Connexion is checking as to what may (or may not) change longer term but changes being implemented from April 2024, for the next UK tax year (2024-2025), should not have an effect on people who pay voluntary Class 2 National Insurance Contributions (NICs).

This includes people living abroad in countries such as France.

At present payment of Class 2 NICs involves two groups, essentially:

Under the latest rules (as of the 2022-2023 tax year) self-employment people in the UK with profits above a ‘lower profits limit’ (£12,570 in 2023-2024) must pay both fixed-rate Class 2 NICs (£3.45/week for 2023-2024) and Class 4 NICs at a percentage of the part of profit that falls above the lower profits limit.

  • Those with earnings less than a so-called ‘small profits’ threshold (£6,725 in 2023-2024) can opt to pay voluntary Class 2 NICs to maintain contributory benefits including topping up their future state pension entitlement.
  • Those who made National Insurance contributions in the UK, were working up to the point before they left the UK, and still work in the country where they live now (eg. France) may also pay voluntary Class 2 NICs to keep their pension ‘topped up’. Another condition for this is having lived in the UK previously for at least three years and/or paid NICs for this amount of time.

    Those who do not meet the conditions, such as early-retirees in France, can only pay at a higher ‘Class 3’ voluntary contributions level. The latter (currently £17.45/week) is also payable by certain categories of UK resident (eg. early-retirees) who want to top up their state pension.

‘Topping up’ the pension refers to making a payment towards a person’s state pension entitlement. To claim a full UK state pension at UK retirement age, the current requirement is 35 years of qualifying payments.

Read more: How to top up your UK state pension while living in France

Ordinary obligatory Class 2 payments for the self-employed will be abolished as of the UK tax year 2024-2025 as the system is deemed by the UK government to be “needlessly complicated”, with many self-employed people currently paying both Class 2 and Class 4.

However, the voluntary Class 2 NICs will still exist.

We note however that the Autumn Statement, which sets this out, also states that next year the government will reveal further Class 2 reforms to come, including changes relating to self-employed people who currently pay on a voluntary basis.

We will report on this in due course if these further reforms will affect residents in France.

What else is in the Autumn Statement?

  • The document states that the Autumn Finance Bill 2023 will remove a ‘lifetime allowance’, which will clarify the taxation of pension lump sums and lump sum death benefits, as well as tax treatment for overseas pensions. This will take effect from April 6, 2024, the report states. We will carry further information on this in January’s edition of The Connexion.
  • The report notes that the UK is signing (and expanding existing) youth mobility schemes, to improve opportunities for young people in the UK and abroad to spend time living and working in each other’s countries.

    It states that it has, this year, increased places on schemes for Australia and Canada and that next year there will be ‘new and expanded agreements’ with countries including Japan and South Korea. The government has also expanded the eligibility and length of stay available for people from Canada, Australia and New Zealand.

    We have asked the British Embassy for information on plans for such a scheme for young people from France.

  • The UK is introducing a qualification called the Advanced British Standard, in England. It will be a “Baccalaureate-style qualification which will provide greater breadth of study, improve essential literacy and numeracy skills and ensure technical and academic education are put on equal footing”.

    It also states: “This will bring the best of A-Levels and T-Levels [a new high school qualification launched in 2020] together, creating a unified structure.

    “This reform will ensure every student in England studies some form of maths and English to age 18, boosting basic skills and bringing the UK in line with international peers. It will increase the number of taught hours by 15% for most students aged 16-19 and will broaden the number of subjects students take.”

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