New Rates of Levy Deductions from January 2011
The Social Security Board wishes to update you on matters regarding the Housing and Social Development Levy as follows:
The changes emanating from the recent Budget session in the National Assembly (and which are effective from 1st January 2011) relate only to the percentages that apply to tiers two, three and four as follows:
Those employees who were paying 3% will now pay 3.5% on their total earnings up to $6,500.00 per month
Those employees who were paying 8% on the portion of earnings above $6,500.00 up to $8,000.00 per month will now pay 10% on that portion
Those employees who were paying 10% on the portion of earnings above $8,000.00 per month will now pay 12% on that portion
Please note that there has been no change in the threshold below which employees are exempt. There is also no change in the tiers established for the payment of the levy. They remain as follows:
For Tier One (persons up to the Annual Threshold of $16,640.00 per annum):
For persons who are weekly paid no Levy will be deductible from wages up to and including $320.00.
For persons who are paid every 2 weeks, no Levy will be deductible from wages up to and including $640.00
For persons receiving wages twice per month or every half month, no Levy will be deductible from wages up to and including $693.33
For persons being paid on a monthly basis, no Levy will be deductible from wages up to and including $1,386.66
For Tier Two (persons crossing the threshold and earning up to and including $6,500.00 per month), Levy will be deductible at the new rate of 3.5% of total earnings.
For Tier Three (persons earning between $6,500.01 and $8,000.00 per month) Levy will be deductible at the new rate of 3.5% from earnings up to $6,500.00 and 10% from that portion of earnings between $6,500.01 and $8,000.00 per month.
For Tier Four (persons earning from $8,000.01 upwards per month) Levy will be deductible at the new rate of 3.5% from earnings up to $6,500.00; 10% from that portion of earnings between $6,500.01 and $8,000.00; and 12% from that portion of earnings from $8,000.01 onwards per month.
It is important to repeat that your contribution on behalf of each employee is not affected by these changes. The employer’s portion of the Levy remains at 3% and is payable in respect of all wages paid.
If you are using a version of the Statement of Wages and Contributions (C3) form which contains the outdated information, please be guided by the new updated details outlined above. This changes the details of Note 9 (located at the back of the form) relating to rates of deductions; including the Housing and Social Development Levy Exemption Guide shown as part of Note 9.
If your Statement of Wages and Contribution is prepared using a payroll package, please contact your service provider for an upgrade to the application. However, if you are using the C3 Wizard from Social Security to prepare the statement, you will need to get a new copy which has incorporated the changes or you can download it from our website www.socialsecurity.kn. This is available free of cost.
Please do not hesitate to ask for guidance from a Social Security Inspector if you need further clarification.