Contributions:
Self-employed
people
no. 41
This leaflet tells you about the contribution
requirements for self-employed people.
States of Guernsey
Social Security
If, after reading this leaflet, you still have
unanswered questions, please contact
us on 732502
This leaflet should be read with
Leaflet 50, which contains all the
current benefit payments and
contribution rates, available from
www.gov.gg/SScontributions
Contents
Self-employedpeople-whereyoufitin.........................................2
Self-employedpeoplenotliabletopaycontributions....................3
HowandwhenmustIpay?.............................................................3
HowmuchdoIpay?........................................................................4
HowdoIapplytopaycontributionsbasedonmyearnings?.........5
Dividends.........................................................................................5
Whatifmyearnedincomeisreassessed?......................................6
WhathappensifIsetupanewbusiness?......................................6
WhathappensifIhavemorethanonejob?...................................6
WhathappensifIamsick,orunabletowork?...............................7
WhatmustIdoifIstopbeingself-employed?...............................7
WhatbenefitsamIentitledto?......................................................8
Appendix:EarnedIncome...............................................................9
Forfurtherinformation.................................................................11
Whattodoifyouhaveacomplaint..............................................11
1
Self-employedpeople-whereyoufitin
Generallyspeaking,thepaymentofsocialinsurancecontributions
appliestoallpeopleinGuernsey,Alderney,Herm,andJethou,who
areoverschoolleavingage.Therearethreeclassesofinsured
people,payingdifferentratesofcontribution.Theseare:
Class1:Employedpeople
Mostpeoplewhoworkforwagesorasalaryunderacontractof
serviceareinthisclass.
Class2:Self-employedpeople
Thosepeoplewhoareinbusinessforthemselvesandotherpeople
whoareworkingforgainbutnotunderthecontrolofanemployer.
Class3:Non-employedpeople
Allinsuredpersonswhoarenotemployedorself-employed.
ThisleafletisonlyconcernedwithSelf-EmployedPeopleandtheir
liabilitytopayClass2contributions.
2
Self-employedpeoplenotliabletopaycontributions
YoudonothavetopayaClass2contributionforanyweekduringthe
wholeofwhichyouare:
a)
overpensionage(Class3overpensionagecontributionsare
payableinstead);
b)
outoftheIslandforaperiodof13weeksormore,unlessyou
areafishermanworkingonaGuernseyregisteredfishingboat;
c)
receivingcertainbenefitsorcreditsfromSocialSecurity;
d)
alabouronlycontractorinthebuilding&constructionindustry,
whoistreatedasanemployedperson,(seeLeaflet59).
Note:IfyouhaveonlyrecentlyarrivedintheIsland,therearerules
whichmayaffectyourliabilitytopaycontributions.Pleasecontact
SocialSecurityforfurtherdetails.
HowandwhenmustIpay?
EveryonewhoisliabletopayClass2contributionsmustcontact
SocialSecuritytoobtainaClass2contributioncard,orcompletea
DirectDebitmandate.
Thecard,whichcoversacompletecalendarquarter,listseachofthe
thirteenweeks,givingtheweeknumberalongwiththestartingand
finishingdatesofeachweek.Thecardalsoshowsthevalueofthe
weeklycontribution,andthetotalamountdueforthequarter.
Thecardandthetotalamountdueforthequartermustbereturned
toSocialSecuritywithin15daysaftertheendofthequarter.Shortly
beforeyouareduetoreturnthecontributioncardforonequarter,
youwillbesentanewcardforthenextquarter.
3
IfyoudecidetopaybyDirectDebit,youwillnotbeissuedwitha
card.Instead,onceyou'vesignedaDirectDebitinstruction,payment
ofcontributionswillbearrangedbetweenSocialSecurityandyour
bankorbuildingsociety.Youwillbeabletochoosebetween
quarterlyormonthlypayments.Thesewillbecollectedonthe
fifteenthdayofthemonthfollowingthequarter,orthefifteenthday
ofthemonthifyouhavechosentopaymonthly.
Youwillalwaysbenotifiedinadvanceoftheamounttobedebited
fromyouraccount,andwhenthiswillhappen.Youwillalwaysbe
abletocancelaDirectDebitatanytime.
InadditiontomakingpaymentsbychequeorDirectDebit,payments
canalsobemadebydebitorcreditcardintheoffice,overthe
telephone,oronline.Paybydebit/creditcardbyphoning732502or
logonto:www.gov.gg/howtopaycontributions.
HowmuchdoIpay?
Themaximumrateofcontributionpayablebyaself-employed
personiscalculatedbytaking1/52oftheannualupperearnings
limit,andmultiplyingitbythepercentageratesetfortheyear.See
Leaflet50forthecurrentannualUpperEarningsLimitandthe
percentagerate.
IfyouexpecttoearnlessthantheannualUpperEarningsLimit,you
canapplytohaveyourrateofcontributionbasedonyourearnings,
ratherthanpayingatthemaximumrate.Inthiscase,yourrateis
calculatedbytaking1/52ofyourearnedincomeasassessedby
IncomeTaxintherelevantyearofcharge(seeAppendix),and
multiplyingitbythepercentageratesetforthecurrentyear.
4
HowdoIapplytopaycontributionsbasedonmy
earnings?
SimplyfillinanapplicationformavailablefromSocialSecurityorthe
AlderneyStatesOffice.Theformcontainsanauthorisationforthe
DirectorofIncomeTaxtodisclosetotheAdministratorofSocial
Securitytheamountofyourearnedincomefromself-employmentin
therelevantyearofcharge.Youwillbeissuedannuallywitha
notificationshowingyourearnedincomeandtheweeklyrateof
contributionfortheyear.
Self-employedcontributionsmustbepaidwithinfifteendaysafter
theendofthequarter.If,however,yourassessableearningsarenot
availablefromIncomeTax,SocialSecuritywillestimateafigure.This
figurewillbebaseduponyourassessmentforthepreviousyear,and
increasedbyapercentagetobedecidedbytheCommitteeeach
year.Arefundoraccountwillbeissuedwhenyouractualweekly
liabilityisestablished.
WhereIncomeTaxareunabletoprovideSocialSecuritywithdetails
ofyourearnings,anestimatedfiguremaybeused,upliftedfromthe
previouscontributionyear.Youareadvisedtosubmityourquarterly
returnsearly,sothattheinformationneededtoaccuratelyassess
yourrateofcontributionisavailableingoodtime.
Dividends
Dividendsmadetoyoufromacompanyrelatingtoyourselfemploymentareincludedaspartofyourearningswhencalculating
yourcontributionrate.
5
Whatifmyearnedincomeisreassessed?
Ifyourtaxassessmentforayearofchargeisrevised,SocialSecurity
willsendyouanotificationofhowthisaffectsyourcontribution
payments.Ifyourrevisedincomefigureislessthantheoriginal,you
willbeentitledtoarefundofoverpaidcontributions,butifthefigure
ismorethantheoriginalyouwillbeliabletomakeupthedifference.
WhathappensifIsetupanewbusiness?
Inthiscase,thereislikelytobeadelaybeforeincomefromyournew
businesscanbeincludedintheIncomeTaxassessments,whichwill
beusedtodeterminetherateofyourearnings-relatedClass2
contributions.SocialSecuritywillthereforeuseestimatesofyour
incomeforuptothefirstthreeyearsofself-employment.
Yourcontributionratewillberevisedassoonasyouractualearned
incomehasbeenestablished.Ifyourearnedincome,asassessedby
IncomeTax,exceedstheSocialSecurityestimateofyourearned
incomeyouwillberequiredtomakeuptheamountofcontributions
underpaid.Ontheotherhand,youwillreceivearefundifyouractual
earnedincomeislessthantheestimate.
WhathappensifIhavemorethanonejob?
Ifyouarebothemployedandself-employedyoumustpayaClass2
self-employedcontributionaswellasyourClass1contributionasan
employedperson.
Thisdoesnotapplyifyourself-employedearningsarelessthanthe
annuallowerearningslimit.
Youmustcontinuetopayyourself-employedcontributionseither
quarterlybyCredit/Debitcard,orbyDirectDebit.
6
Yourcombinedearningsfrombothyouremploymentandyourselfemploymentwillbeassesseduptotheannualupperearningslimit.If
youremploymentincreasesyourearningsoverthislimityouwillbe
refundedannuallyanyClass2contributionsyouhaveoverpaid.
Formoreinformationonemployment,seeLeaflet40.
WhathappensifIamsick,orunabletowork?
YouarenotliabletopayClass2contributionsforanycontribution
weekduringwhichyouareincapableofworkforfourormoredays,
andyouare:
a)
receivingsicknessbenefit,invaliditybenefit,orindustrialinjury
benefit;or
b)
entitledtoreceiveanincapacitycredit.
Inthesameway,awomanreceivingmaternityallowanceisnotliable
topayClass2contributions,butwillreceivea'credit'foreachweek
coveredbythebenefit.
Anyonereceiving'credits'shoulddeletetherelevantweekshownon
thecontributioncardandreducetheirquarterlypayment
accordingly.
WhatmustIdoifIstopbeingself-employed?
If,foranyreason,youstopbeingself-employed,youshouldcontact
SocialSecurityortheAlderneyStatesOffice,sothatyour
classificationcanbeamendedaccordingly.
7
WhatbenefitsamIentitledto?
Asaself-employedperson,youareentitledtothefollowingbenefits,
subjecttohavingfulfilledtheappropriatecontributionconditions:
a)
Sicknessbenefit
b)
Invaliditybenefit
c)
Industrialinjurybenefit
d)
Industrialmedicalbenefit
e)
Industrialdisablementbenefit
f)
Oldagepension
g)
Bereavementbenefit
h)
Deathgrant
i)
Parentalbenefits
j)
Travellingallowancegrant
Leafletsandfurtherinformationaboutallthesebenefitsareavailable
fromSocialSecurityortheAlderneyStatesOffice,andonlineat
www.gov.gg/benefits.
8
Appendix:EarnedIncome
Thisistheamountofincomeyouearnedfromyourself-employment,
andwhichisincludedinyourassessableincomefortaxpurposesin
therelevantyearofcharge.
IncomeTaxacceptsaccountsforaperiodofupto18monthswhena
businessfirstcommences.Ifanincomeassessmentisforaperiodof
morethan12months,itwillbeapportionedtoreflectonly12
monthsearnedincome.
Sometimes,anassessmentwillnotbeproducedinrespectofthe
yearofchargerelatingtothefirstpartyearoftrading.Again,inthese
circumstances,thefirstincometaxassessmentproducedinrespect
ofthebusinesswillbeapportionedtoreflectthispartyearoftrading,
inordertocalculateyourcontributionrate.
Thefollowingtableoutlinestherulesappliedtothefirstthreeyears
ofbusiness,upto31December2017:
FinancialYear
Ending
IncomeTaxYear
ofCharge
2017
Ifnoassessment,
then2018prorata
ContributionYear
1Jan-31Dec
2018
2018
2018
2018
2018
2019
2017
9
2017
Otherthanthepeoplestartingupanewbusiness,wheretherules
setoutintheprevioustablewillapply,SocialSecurityusesincome
from2yearsprevioustoestablishyourrateofcontributionforthe
currentyear.
Thefollowingtableexplainsthis:
FinancialYear
Ending
IncomeTaxYear
ofCharge
ContributionYear
1Jan-31Dec
2015
2015
2017
2016
2016
2018
2017
2017
2019
Leaflet50setsoutthecurrentcontributionratesforemployed,selfemployedandnon-employedpeople.Italsodetailstheearningsand
incomelimits.
10
Forfurtherinformation
Ifyouareunsureofthemeaningofanyparticularpointinthisleaflet,
pleasecontactSocialSecurity,ortheAlderneyStatesOffice,where
staffwillbepleasedtohelpyou,andfromwherecopiesofother
leafletsmaybeobtained.
MoreinformationisalsoavailableontheStateswebsitehere:
www.gov.gg/SScontributions.
IfyouarewritingtoSocialSecurity,pleasequoteyoursocial
insurancenumber,ifknown.
Whattodoifyouhaveacomplaint
Ifyouaredissatisfiedwithanyaspectofourservicespleaseleta
memberofstaffknowatthetimesothatwecantrytoresolvethe
issueimmediately.IfyouwishtomakeaformalcomplainttoSocial
Security,pleasecontactusforacomplaintsleafletandreturnthe
completedcomplaintsformtoSocialSecurity,EdwardT.Wheadon
House,LeTruchot,StPeterPort,GY13WH.
Youcanalsorequestmoreinformationbyemailandreturnyour
[email protected]
complaintoracomplimenttousonlineattheStateswebsite,by
visitingwww.gov.gg/cccandcompletingtheelectronicform.
11
How we collect and use information
Social Security processes personal information for social
security purposes in order to carry out functions relating to
the relevant social security and associated legislation that it
administers. The information collected will depend on your
business with us, but will be no more than is required for that
purpose. We may get information about you from others for
any of our purposes if the law allows us to do so. We may also
share information with certain other organisations if the law
allows us to. Any personal information you give to us will be
processed in accordance with the Data Protection (Bailiwick
of Guernsey) Law, 2001. If you wish to know more about the
information we have about you, or about the way we use it,
you can ask at the Office of the Committee for Employment &
Social Security or by emailing:
[email protected]
This leaflet is for guidance and must not be treated as a
complete and authoritative statement of the law.