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Long-term care scheme: contributions

 

Long-term care contributions

The long-term care fund is set up to help those who need long-term care.

Every insured person who pays income tax, pays into the long-term care fund with a long-term care contribution.

If you're not liable for income tax, you won't have to pay the contribution but you can still get support from the fund for your long-term care costs.

The States of Jersey also contribute into the fund each year.

Long-term care scheme: benefits

How much you pay

If you are not liable to tax (you're below the tax exemption threshold) then you won't have to make a long-term care contribution in that year.

If you have a tax bill then you will also have a long-term care contribution to pay. 

The maximum long-term care contribution rate is 1%, but most people will pay less than this.

This works in the same way as income tax where the standard tax rate is 20%, but most people pay less than 20% tax on their annual income.

Your contribution is based on your total income but will take into account the same allowances and reliefs you benefit from for tax.

Marginal relief calculation of personal tax

Examples comparing the contribution before and after tax deductions are taken into account

HouseholdIncomeLong-term care contribution on total income at 1%Actual long-term care contribution in 2019Actual % of total income
​Single
​£15,000
​£150
£0​​0%
Single
£16,000 £160£8
0.05%
Single£30,000 £300£1900.35%
Single
£40,000 £400
£320
0.8%
Single £70,000£700£7001%
​Married / civil partnership
​£30,000
​£300
​£0
​0%
Married / civil partnership £32,000 £320
£16
0.05%
Married / civil partnership£50,000 £500£250
0.5%
Married / civil partnership£70,000 £700£510
0.73%
Married / civil partnership£130,000 £1,200
£1,2001%


Upper income limits and long-term care contributions

Unlike income tax, an upper income limit will be taken into account when calculating your long-term care contribution. This upper income limit is the same amount as the social security upper earnings limit.

Social Security contribution levels

How your contribution is collected

Your contribution is calculated by the Taxes Office and is collected in the same way as your income tax. There are no extra forms and the amount is shown separately on your tax bill.

If you pay tax by deduction from your earnings, your rate will include both your income tax liability and your long-term care contribution.

If you pay income tax directly, the long-term care contribution is included in the amount you pay.

Calculation of rate

The combined effective rate is the sum of the following, rounded up to the nearest number:

  • the effective rate calculated in accordance with the relevant part of the income tax law
  • the LTC contribution effective rate calculated with the relevant part of the social security law

LTC contribution rate formula

LTC contribution rate formula.PNG

L is the sum of:

  • your estimated LTC contribution for the payment year
  • any unpaid LTC contributions for previous years

I is the sum of:

  • all your taxable income for the year of assessment

Less:

  • your allowable employment expenses and pension contributions for the year of assessment

The sum of 'I' is also modified by the relevant articles of the income tax law, to take into account provisional rate and new taxpayers calculations.

Calculating your tax rate (deduction from earnings)

Where your contribution is going

Your contribution goes into a separate fund which can only be used for long-term care.

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