Jersey Highlights Upcoming Social Security Changes

By ExpatBriefing.com Editorial 06 December, 2011

The Jersey government has reminded taxpayers of changes to the territory's system of social security contributions from January 1, 2012, including an increase in the rate paid by employers and incentives for new business formations.

In July 2011 the States Assembly agreed to increase Social Security contributions for employers of staff earning more than GBP45,336 per year. This increase in contributions was agreed by the Assembly as part of a three-pronged plan to return to balanced budgets by 2013. As a result, from January 1, 2012, employers will have to pay a new 2% rate on employees’ earnings between the Standard Earnings Limit of GBP45,336 per year and the Upper Earnings Limit of GBP150,000 per year.

This change also affects anyone with an annual income of more than GBP45,336 who pays Class 2 contributions. Class 2 contributions are paid by the self-employed and by people without employment.

The government has also reminded new business owners that they will be eligible to pay a lower contribution rate for the first two full calendar years of trading. In addition, the assessment of earnings in the early years of a new enterprise will no longer be based on the business owner’s previous earnings as an employee.

From January the newly self-employed will instead pay one third of the rate set for the Standard Earnings Limit. This means in 2012 they would pay GBP157.42 per month (one third of the SEL monthly rate of GBP472.25). Once tax assessments are available for the first year of trading, contribution levels will be re-calculated.

The measure seeks to address treatment which has been described as a disincentive for entrepreneurs considering their first step into self-employment, the government explained.

Tags: Expatriates | Tax | Business | Fiscal Policy | Entrepreneurs | Employees | Budget | Jersey | Offshore | Self-employment | Social Security |

 





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