People who are self employed and non-employed
Part One - Liability for Class 2 contributions
Regulation of Undertakings and Development (Jersey) Law 1973
Under this Law no-one can start any trade, business or profession in Jersey without a licence. To apply for a licence please contact:
The Regulations of Undertakings and Development Office
3rd Floor
Jubillee Wharf
24 Esplanade
PO BOX 843
St Helier
JE4 0UT
Tel: 448930
Please note: Registering as an Employer under the Social Security Law does not exempt you from the need (where appropriate) to get a licence under the Regulation of Undertakings and Development legislation
Who has to Pay?
You must pay a Class 2 contribution if you:
- are over school leaving age
- have been in Jersey for any continuous period of at least six months
- do not work for an employer
- have earnings from Class 1 employment which are less than the lower earnings threshold
ie. £717 a month in 2008
Please note: the last of these conditions avoids taxpayers' money being used to support people in part-time or ‘inconsiderable' employment. So, if for any month you receive earnings of less than the lower threshold level, you will receive a Statement of Arrears notice stating the amount of Class 2 contribution you are due to pay.
Please note: you must add your earnings together if you have 2 or more jobs.
Who does not have to Pay?
You do not have to pay a Class 2 contribution for any complete month if you are:
- over 65
- over 60, retired from regular employment and have made an election not to pay contributions
- a married woman who has elected not to pay contributions and who is registered and married before 1st April 2001
- in receipt of a Survivor's Benefit and have chosen not to pay contributions
- out of the Island
- exempted from paying because you have been granted a Small Income Exception (see Part 2)
- Incapable of work (see Part 6)
- over 18 and in full-time education
- aged between 63 and 65 and have elected to take your pension early
- staying at home to look after a child under the age of 5 and have been granted Home Responsibility Protection.
Further information about these groups can be found in the leaflet entitled - People who need not pay Contributions
Part Two - Class 2 contributions
The Class 2 contribution
This is a monthly amount of £424.25 for 2008, which is equal to 12.5% of the earnings ceiling of £3,394 per month. It is the amount needed to pay for benefit at the standard rate.
The Earnings Related Class 2 contribution
As with an employed person, if you have lower earnings, you may be entitled to pay a smaller contribution. It will be topped up to the amount of the Class 2 contribution. This top up is called supplementation. To qualify for this, your income in the ‘relevant Income Tax year' must be between the limits given in the section entitled “Income Limits for Earnings Related Class 2 contributions”.
The earnings related contribution for 2008 is calculated on your earned income for the 2006 Income Tax year of assessment. For example in the year 2008 we calculate your monthly earnings related figure by multiplying your earned income by 12.5% and dividing by 12.
This is an example:
If your earned income for the relevant Income Tax year is - £17,000.00
12.5% of that amount would be - £2,125.00
Therefore your monthly Earnings Related Class 2 contribution would be £2,125.00 divided by 12 - £177.08
The Relevant Income Tax year
This is 2 calendar years before the year in which you make the claim. For example, to claim an earnings related contribution for 2008 you must produce your 2006 Income Tax notice of assessment. If you were in full-time education or training during that year, and were not liable to pay tax, your current annual income may be assessed instead.
Applying to pay an Earnings Related Class 2 contribution
At the beginning of each year you should call at the Department if you want to apply for your Earnings Related Class 2 contribution. Remember that if you apply after 31 March your Earnings Related Class 2 contribution will only start from the beginning of the quarter in which you apply.
When you apply, you must give us proof of your earned and unearned income for the 2006 Income Tax year of assessment. Normally this is the last Income Tax notice of assessment you received. You may also be required to supply additional information to substantiate your claim.
If your application is successful, we will tell you about your Earnings Related Class 2 contribution on either a notification form, or on a payment slip.
Income limits for Earnings Related Class 2 contributions
Upper limit
The total of your earned income for the 2006 Income Tax year of assessment must not be more than £40728. This amount is equal to twelve times the monthly earnings ceiling in 2008.
The total of your earned and unearned income for the 2006 Income Tax year of assessment must not be more than £54304. This amount is equal to sixteen times the monthly earnings ceiling in 2008.
Lower limit
Your earned income alone for the 2006 Income Tax year of assessment must not be less than £7,956. This is the annual amount equal to the lower threshold level for 2006.
Small Income Exception (S.I.E.)
You may be excused from paying Class 2 contributions if either:
- your earned income for the 2006 Income Tax year of assessment was less than £7,956 and your total income for the 2006 Income Tax year of assessment was less than £27152, which is eight times the monthly earnings ceiling in 2008
- your total Income for the current year is expected to be less than £13,703, which is the 2008 Small Income Exception level.
If you want to claim Small Income Exception you must apply in person at the Department. We will then explain to you how it will affect your future right to benefit.
Earnings that count towards Earnings Related Class 2 contributions
Items that should be included as earnings:
‘any sum payable to a person (whether under a contract of service, a contract for services or any other office, employment or arrangement whereby he is rewarded for work done or services rendered) by way of wages, salary, fees, bonuses, commission, overtime pay or any other emolument including the value of any loan, perquisite or any other benefit in kind'
Items that should not be included as earnings;
- Business expenses allowed under Income Tax law (including wear and tear)
- Widow's pensions
- Spouses income
- Schedule A income for owner-occupier business premises
Part Three - Social Security Registration Cards
Types of registration cards
There are 2 types of registration card:
Blue card (FR1)
This card shows that the holder has to pay Class 2 contribution
Red card (XR1)
This card shows that the holder does not have to pay Class 2 contribution
It is vital for you to quote the correct Social Security number when you send contributions to us or write to us. This helps us to safeguard your right to benefit by crediting your account correctly and quickly.
How to get a registration card
Registration cards are issued to insured people when they first register at the Department.
We can give you a replacement registration card if you:
- lose your original card
- change your liability, for example, when a woman is married or divorced
Part Four - How to send in Class 2 contributions
General
You should send in your contribution with a Class 2 payment slip. When you return that payment slip with a payment we will automatically send you a payment slip for the next quarter. If you do not receive your slip, please let us know. It is your responsibility to send in payments on time.
How to complete the payment slip
The payment slip will show the contribution due from you for the quarter. Within 15 days of the end of that quarter you should complete the slip by filling in the amounts for each month you are including in that particular payment. Then return it to us with the payment for the quarter.
Paying by instalments
If you would like to pay by instalments you should contact the Compliance Section, who will arrange everything for you.
Paying by Direct Debit
If you would like to pay by Direct Debit please contact the Contributions Zone who will arrange this for you.
Part Five - Change of contribution liability
If you go to work for an employer
Give your Social Security registration card to your employer. They must have this before they are allowed to employ or pay you.
Even if you have already started working for an employer, but receive no payment during a calendar month, you still have to pay your Class 2 contribution for that month.
Working for an employer
If during the month you receive wages from an employer, you should contact the Contributions Zone in the Department. Depending on how much you have been paid during the month and the number of hours you have worked for the employer per week there may be no need for you to pay a Class 2 contribution for that month. Please remember to keep a note of the date on which you were paid and how much you received.
Part Six - Class 2 contributors who receive Social Security Benefit
If you stop working for an employer
From the beginning of the next month you must get a Class 2 payment slip from the Department if you do not already have one. If you now employ others, get an employers schedule for that quarter.
It is important to remember that you are responsible for making sure that you have a payment slip in time to make your payment.
Please refer to Part 2 of this leaflet.
Credited contributions
Class 2 contributors who are receiving Short Term Incapacity Allowance or Maternity Allowance do not have to pay contributions whilst in receipt of the benefit. During this period their contribution records are credited from Social Security Funds. This safeguards their future right to benefit.
If you do not receive benefit for the whole of the month you may have to pay part of your Class 2 contribution for that month.
Students over 18, widows, widowers, unemployed people and those staying at home to look after a child under age 5 may also qualify for credits. If you fall into one of these groups you should contact us and ask if you are entitled to have your contributions credited.
What to do if you have been getting Social Security Benefit
If during the whole of a month you were receiving one of the benefits mentioned above, you should not pay a contribution at all for that month. You should, however, always return your payment slip with any contributions due for other months of the quarter.
If you receive one of the Benefits mentioned for only part of a month, you should pay a Class 2 contribution for that month. But take off £15.16 for each day you received benefit. £15.16 is the daily value of a credit contribution.
If the daily credit rate comes to more than your Earnings Related contribution in that month do not pay anything for that month. Any credit above your earnings related contribution must not be deducted from another month. The “excess” credit reduces the amount of top up needed to give you a full contribution record in that month.
If you receive a Statement of Arrears notice you should try to pay the outstanding amount within 7 days. If you want to know in advance how much you will have to pay, please contact the Contributions Zone who will be happy to advise you.
Part Seven - Further Information
This leaflet gives general information and does not try to give full details on any particular matter. It cannot be treated as a statement of the Law.
Please contact us if you have any questions or suggestions about the information contained in this leaflet.
Our staff are here to help you, please telephone us on 445505 or call into our office.
If you become unemployed you may wish to visit our website www.jobsinjersey.gov.je and search for current vacancies online.
Please note: calls to the Department may be monitored for training purposes. Other leaflets that may be of interest
Large print versions of most of our leaflets are available. Please call us on 445505 and we will be happy to send them to you.
