Autumn Budget 2025 announces NICs measures

The Autumn Budget on 26 November 2025 announced three National Insurance measures, according to the Government Actuary's Department report on the draft Social Security Benefits Up-rating Order 2026 and the draft Social Security (Contributions) Regulations 2026¹. The measures are the extension of the freeze in most National Insurance contributions (NICs) limits and thresholds from April 2028 to April 2031; a restriction on salary sacrifice pension contributions from 6 April 2029; and the removal of access to Class 2 voluntary NICs from abroad, with higher initial residency and contributions history requirements for Class 3 NICs for individuals abroad from 6 April 2026¹.

On salary sacrifice, the report states that from 6 April 2029 only the first £2,000 per annum of employer pension contributions made via salary sacrifice by each employee will be exempt from NICs, with employer and employee NICs charged on any excess¹. The measure is provided for by the National Insurance Contributions (Employer Pensions Contributions) Bill 2025¹.

The report projects that the three measures will increase National Insurance Fund income by £0.4bn in 2028-2029, £3.7bn in 2029-2030 and £4.3bn in 2030-2031¹. It also projects that the draft Regulations will increase the Lower Earnings Limit, the Small Profits Threshold and the Class 2 and Class 3 voluntary contribution rates in line with CPI, and extend zero-rate contributions for armed forces veterans from 6 April 2026 until 5 April 2028¹. Most limits and thresholds are not changing in April 2026, and the draft Regulations are not projected to result in any material change in Fund income in 2026-2027¹.

Separately, the draft Order increases the rates of social security benefits paid from the Fund from April 2026¹. The full rate of the basic State Pension rises from £176.45 to £184.90 per week, and the full rate of the new State Pension rises from £230.25 to £241.30 per week¹. The projected increase in benefit expenditure in 2026-2027 as a result of the draft Order is £6.9 billion, taking projected expenditure on the benefits covered from £152.4 billion to £159.3 billion¹. State Pension age is increasing from 66 to 67 from April 2026 to March 2028¹.

HMRC's guidance on applying to pay voluntary National Insurance contributions for periods abroad was updated on 26 November 2025 with information about changes to voluntary Class 2 National Insurance contributions for time spent abroad from 6 April 2026 following the Autumn Budget 2025². The page was further updated on 7 April 2026, when rates and thresholds were updated for the tax year 2026 to 2027². The guidance says that if you are over, or within six months of reaching State Pension age, HMRC cannot process your application and you must contact the International Pension Centre².

Why it matters for households

The freeze extension means most NICs limits and thresholds stay at their current levels for longer, so more of a pay rise can fall within NICs than would otherwise be the case. The salary sacrifice change affects workplace pension contributions made through salary sacrifice: from 6 April 2029, only the first £2,000 a year of employer pension contributions made that way by each employee is exempt from NICs, with employer and employee NICs charged on any excess¹. That changes the NICs position for employees whose salary sacrifice pension contributions exceed that amount, and for their employers.

For people who have lived or worked abroad, the removal of access to Class 2 voluntary NICs from abroad and the tighter Class 3 requirements apply from 6 April 2026¹. Voluntary contributions are used to fill gaps in a National Insurance record, which can affect entitlement to the State Pension and certain benefits. The Government Actuary's report does not set out the new residency and contributions history requirements in detail, and the specific thresholds have not been reported in these documents¹. The report also notes that it has not modelled the impact of changes to the Class 2 and Class 3 rates because of the difficulty in projecting voluntary contributions and their small impact on the Fund balance¹.

What happens next

The draft Social Security Benefits Up-rating Order 2026 and the draft Social Security (Contributions) Regulations 2026 are before Parliament, and the Government Actuary's report is prepared for Parliament under the Social Security Administration Act 1992¹. The benefit uprating and the Class 2 and Class 3 changes take effect from April 2026¹. The salary sacrifice restriction takes effect from 6 April 2029¹. The next Quinquennial Review of the Fund, with an effective date of 1 April 2025, will update longer-term projections; the previous review was published on 17 March 2022¹. The third State Pension age review and the Pensions Commission, launched in July 2025, are both considering aspects of the pensions system¹.