Employer Tax Contributions

Tax Type	Rate	Base
Social Security	7.0%	Gross earnings (up to GBP 15,717 monthly)
Income Tax (PAYE)	20%	Employee salaries and wages (after allowances)
Secondary Pension Scheme	1% (initial)	Employee earnings (same definition as social security)

Filing & Compliance

• Employers must register with the Revenue Service and Social Security Department.
• Quarterly returns and payments for tax and contributions are due by the 15th of April, July, October, and January.
• Annual returns detailing employee earnings, tax deducted, and social security contributions paid are due by November.

In Guernsey, employee tax deductions primarily involve income tax and social security contributions, deducted directly from salaries through the Employees Tax Instalment (ETI) system.

Income Tax

• Flat Rate: Guernsey operates a flat income tax rate of 20% for residents and those deriving Guernsey-source income. A proposal to increase this rate to 22% over two years (2025-2026) has been put forward to address a projected debt.
• Personal Allowance: For 2025, the personal allowance is £14,600. This means earnings up to this amount are tax-free.
• Allowance Reduction: For earners above £82,500, the personal allowance is reduced by £1 for every £5 earned over this limit.
• Tax Caps: Residents can elect to cap their tax liability. One option restricts tax on non-Guernsey income to £110,000, plus tax on Guernsey-source income (excluding bank interest). Another caps tax on worldwide income at £220,000. Income from Guernsey land and property is excluded from these caps and taxed at the standard 20% rate. Married couples are subject to a single cap.
• Pension Contributions: Tax-deductible contributions to Guernsey registered pension schemes are capped at the lower of 100% of gross earnings or £50,000 (subject to allowance reductions for high earners).
• Benefits in Kind: Benefits provided to employees are generally subject to income tax and social security, with a £450 annual exemption. Certain benefits, such as share options, accommodation, and motor car benefits, are fully taxable and not covered by the exemption. Specific guidance from the Income Tax Office exists for valuing such benefits. Medical insurance is typically exempt.
• Mortgage Interest Relief: As of 2025, mortgage interest relief on Guernsey principal residences is no longer available. This relief, previously applicable to the first £400,000 of a mortgage, has been phased out.

Social Security Contributions

• Employee Contributions: The employee social security contribution rate for 2025 is 7.4% of gross earnings.
• Employer Contributions: The employer contribution rate for 2025 is 7%.
• Earnings Limits: The monthly upper earnings limit for social security contributions in 2025 is £15,717, and the lower limit is £797.33.
• Directors: As of 2025, directors with substantial control of a limited liability company are treated as employees for social security purposes. An opt-in choice exists for directors to remain classified as self-employed for five years, provided the application is made before December 31, 2024.

Tax Administration

• ETI: Income tax and social security contributions are deducted from employee salaries through the Employees Tax Instalment (ETI) system, operating through payroll.
• Tax Returns: For the 2025 tax year, returns are due by November 30, 2026.
• Payments: Tax is typically due in two installments, by June 30 and December 31 of the tax year, with a final balancing payment due after assessment. Interim assessments with quarterly installment payments are expected.
• Coding Notices: Employers use coding notices issued by the Revenue Service to determine the tax-free allowance for each employee. These notices are sent annually.

Other Taxes

Guernsey does not levy Value Added Tax (VAT), Goods and Services Tax (GST), net wealth/worth taxes, or inheritance tax. Document duty exists; further information is available in corporate tax summaries.

It's crucial to remember that this information is based on the available data as of today, February 5, 2025, and may be subject to change. Consulting official government resources or a tax professional is recommended for the most up-to-date and personalized guidance.