Temporary 2% reduction in Social Security contributions
The Minister for Treasury and Resources and the Minister for Social Security have proposed a temporary reduction to Social Security contributions. Subject to a States Assembly decision (debate scheduled for 13 September), employers will need to implement a 2% reduction for their employees from 1 October 2022* until 31 December 2022.
Employers' contributions won't be affected, but anyone who pays Class 2 contributions will also benefit from a 2% reduction (more information below).
*This is also the date from which all contributions will become payable monthly.
How will this affect employers (and their payroll providers)?
If you pay your employees' contributions, you'll need to temporarily reduce the amount of those contributions - from 6% to 4% - on any earnings up to the Standard Earnings Limit (currently £4,764 per month). Your contributions as an employer will remain the same.
If the reduction is approved by the Assembly, it'll apply to any contributions paid from 1 October 2022. You should immediately notify any third-party payroll suppliers you use so that they can make preparations on your behalf.
How will this affect people who pay Class 2 contributions?
Class 2 contributions are paid by individuals who are self-employed (or not employed) and who are below Social Security pensionable age.
Anyone who pays Class 2 will also see a 2% reduction in their Social Security contributions, from 12.5% to 10.5%, from 1 October until 31 December 2022.
Revenue Jersey will write to all individuals who pay Class 2 contributions with further information about this change.
Why are we reducing contributions?
This change forms part of the Government's mini-budget, which was the top priority within the Chief Minister's 100 Day Plan. The mini-budget includes other changes to tax thresholds and allowances which, if approved by the States Assembly, would be implemented from 1 January 2023.
The 2% reduction is a temporary measure, designed to increase Islanders' take-home pay until the 2023 tax changes come into effect.