Summary

The UK has a comprehensive social security system which provides a range of old age, invalidity, unemployment and other social benefits, including family allowances and income guarantees. Entitlement to benefits generally derives from an individual’s National Insurance contribution history, although some benefits arise due to residence in the UK.

Access to the UK National Health Service is not dependent on having paid UK National Insurance; rather, it is accessible through UK residence and long-term ties.  

Details

Contributions

Employers pay contributions at 15% on all earnings over £5,000 per year. Employees pay 8% on earnings between £12,570 and approx. £50,270 per year, and 2% on earnings above that level. Employer-only contributions are also due on non-cash benefits in kind (e.g. company cars, health insurance).

Treaties

The UK has a multilateral social security agreement with the countries of the EU under the Trade and Cooperation Agreement. It has separate treaties with the non-EU EEA countries, plus 16 other countries, including the US, Canada and Japan. A new agreement has been signed with India, which provides for 3 years of home country coverage and should come into force in the Summer of 2026.

These agreements determine which country has the right the levy social security contributions, has the obligation to provide benefits, and prevent social security being levied twice on the same income. Most inbounds expatriates to the UK therefore continue to pay home country social security rather than UK contributions, although there is a cost benefit to paying UK contributions rather than paying, for example, French or Italian contributions, and this can be facilitated by assignment structuring (eg longer term postings)

Home country coverage is limited to two years under the UK/EU-EEA agreement, and special provisions provide for those who are commuters, cross border workers or who work regularly in more than one country.

Exemptions

Individuals assigned into the UK from non-agreement countries, and their host companies, will generally be exempt from UK National Insurance for the first 52 weeks of presence in the UK. Individuals leaving the UK to work in non-agreement countries will, if they continue to be employed by a UK entity continue to be liable to UK National Insurance for the first 52 weeks after their departure (as will their UK employer).

Certain tax exemptions (for example, that relating to expenses associated with temporary duty in the UK for assignments of up to 2 years) can also be effective for National Insurance purposes.

Given the increasing rates of employer National Insurance contributions, salary sacrifice arrangements (for example, into pension schemes) are becoming more attractive to employers, although limitations on the amounts that can be sacrificed are scheduled to come into force in April 2029.

Administration

For most employees, contributions need to be calculated and paid over via a UK payroll, usually of the UK host company. For individuals liable to UK National Insurance but without a host employer, a special scheme can be set up to facilitate payment of the employee contributions directly to the authorities.

.

Benefits

UK social security benefits are wide ranging but are not high. The state pension – currently worth up to £12,500 per year - is payable pro-rata after 10 years of contributions have been made in the UK (or a treaty country), and full entitlement comes from 35 years of contributions. State pension age is 66, rising to 67 in 2028 and 68 by 2044-46.

Need more specific advice?Ask an expert