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The Tax System

Jersey’s tax system has recently undergone major reform, to make the island’s tax system more internationally competitive and less dependent on tax to pay for public services.

Income tax on the island currently accounts for around 85% of the States’ revenue.

 

Income tax

Since 2006, Jersey has been using the Income Tax Instalment System (IT IS), changing payments due for the previous tax year from an annual lump sum to monthly instalments.

The income tax rate is set annually by the Finance (Jersey) Law, although it has remained 20% for over 50 years.

The tax year runs from January to December. Tax returns are issued in January and must be completed by the last Friday in May, or July for individuals using an accountant. The Notices of Assessment, showing the total calculated income, are issued in September.

20% means 20%

The Jersey government has tried to make tax payments fairer by phasing out allowances for higher earners – the idea being that no-one pays more than 20% income tax.

This gradual introduction up to 2010 means even the highest earners will pay less then 1% more tax each year. By 2011, the ‘20% means 20%’ campaign should mean an extra £10 million in income for the island.

Goods and Services Tax (GST)

In May 2008, Jersey introduced a Goods and Services tax of 3% across the island. Previously around a quarter of eligible taxpayers paid no tax in Jersey, and GST aims to redress this balance. 

It is a good way of generating a lot of revenue, both from residents and visitors, and has relatively low administration costs.

GST is charged on all goods and services except:

• financial services
• insurance
• postal services
• medical supplies
• prescription medicines
• charity supplies
• housing supply
• supply of land
• some services or materials (in connection with the construction of housing, exports and the supply of international services).
  

Taxes on businesses

Jersey corporations pay no capital gains tax (CGT), capital transfer tax, purchase or sales tax.

The government introduced the zero/ten corporate taxation regime on 1st January 2009, which gives most companies a 0% tax rate on income.

Some financial services companies pay 10% under the new regime and utility companies continue to pay 20%.

Taxes on trusts

All trusts held in Jersey by non-residents are automatically exempt from tax.

Residents may receive some exemptions, dependent on the individual situation.

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