In a cost of living mini-budget 2022, the Council of Ministers for Jersey have proposed a temporary 2% cut in Class 1 employee social security contributions from 1st October 2022 through to 31st December 2022 to provide relief before proposed 2023 income tax changes can take effect.
This is still subject to debate and agreement was originally anticipated taking place on the 13th September 2022. Subsequently the date has been set as 20th September 2022.
This means for three months reducing the social security Class 1 employee contribution rate from 6% to 4% below the standard earnings limit (SEL) of £4,610 per month (equivalent to £55,320 per year).
On 1 January 2023, the social security contribution rates will return to their previous levels as new income tax changes take effect.
This temporary change to legislation will reduce the social security contributions of approximately 54,000 workers in October, November and December 2022 – increasing their disposable income and providing support towards the higher cost of living.
The average reduction in contributions is approximately £57 per month or £171 for the quarter. The actual reduction will vary from person to person.
What does this mean for software developers?
SD Worx is monitoring the process of approval in readiness to apply changes for users who operate Jersey Payrolls. The SD Worx service in the UK also offers calculations and payroll support for Guernsey, Jersey, Isle of Man and the Republic of Ireland in addition to the operation of PAYE in the United Kingdom.
The notification from the Jersey authorities provides a very tight development window which is being monitored by SD Worx.
The Jersey authorities have confirmed approval to go ahead.
Updates will be applied to the SD Worx Jersey pay solutions to include the temporary reduction.
(PSP) Updated 22nd September 2022