The Chamber of Commerce has raised concerns about the proposed Social Security reforms that are part of the States ‘GST+’ tax reform package – saying local businesses need to engage now, before decisions are made.
The States are due to debate the proposed introduction of GST+ this July – with details due out soon on the results of a tax review panel that were looking at alternatives to the goods and services tax.
The ‘+’ part of the GST+ package includes changes to income tax personal allowances, and the introduction of annual social security contribution allowances.
Chamber warns the social security changes could impact heavily on employers.
Chamber Director Diane de Garis is a Chartered Accountant and tax advisor.
She warns that under the proposed changes, “employers face a significant and ongoing increase in their Social Security contribution obligations”.
This would include employer contribution rates rising from 7.1% (2026) to 8.0% under the proposed Tax Reform plan, plus an additional 2.5% on income between the Upper Earnings Limit and £250k.
No allowances would apply to employers under the proposed scheme, unlike employees and the self-employed.
Existing agreed rate increases are being accelerated and compounded with additional levies, while changes to payroll systems will be required, even though no system currently exists that can deliver the proposed structure.
“We support a sustainable Social Security system and fair treatment of income,” said Ms de Garis. “But what is being proposed places a significant ongoing burden on Guernsey employers, with insufficient transparency about what is new versus what was already planned. Businesses need predictability.
“This package, as currently structured, does not provide it.”
The Chamber is calling on Government to provide a clear, breakdown of the £17m contribution increase that is proposed, transparency on what was already agreed versus what is new, a predictable and manageable phasing of any changes, and a full impact assessment on Guernsey businesses.
Ms de Garis said none of this has been done so far.
She will be speaking at a Chamber of Commerce member briefing event next Thursday, where businesses will hear a breakdown of the proposals and Chamber’s concerns.
Businesses can then put their questions directly to Chamber and Government representatives.