Social Security contributions (FOI)

Request

In relation to Class 2 social security contributions, the Goverment of Jersey website states "If you go from paying Class 1 to Class 2 contributions, send us your tax assessment to receive a reduced rate."  Presumably this is a reference to the provision in Article 13A of the Social Security (Contributions) (Jersey) Order 1975.

Please advise how the Social Security department determines or calculates what the reduced rate of Class 2 contribution will be in any particular case where a person goes from paying Class 1 to Class 2 contributions.

Response

A Reduced Rate Calculation (RRC) is calculated when a person’s total income is above the Class 2 Lower Earnings Limit and below the Upper Earnings Limit (UEL) based on a Tax assessment two years prior. 

A reduced rate is calculated at 12.5% of a person’s income between the Lower Earnings Limit and the Standard Earnings Limit, and 2.5% of any income up to the Upper Earnings Limit. The maximum rate of contributions for a Class 2 individual in 2023 is £1,082.80 per month.

The 2023 Class 2 limits are set out below: 

Contribution limits are increased every year; Class 2 contributors are therefore reassessed yearly and issued with a RRC if applicable. 

Where a tax assessment is not available due to not being finalised with Revenue Jersey, that person is liable at the maximum rate of contributions until a tax assessment is provided.