Jersey: Personal Taxation
Income tax is charged in respect of all property, and profits or gains arising out of:
- rents and other income from land
- profits from interest and dividends payable out of either public revenues of the island or by coupon
- Annual profits or gains accruing to:
- any Jersey resident from any type of property, and
- any resident from any trade, profession, employment, or office wherever carried on and from any pension wherever arising, and
- any non-resident, including British subjects, from such property, trade described in (a) and (b) above, carried on in Jersey, and
- interest, annuities and other annual profits or gains not charged under A or B and not especially exempted from tax.
A 'perks' tax introduced from 2004 covered any work related non-cash benefit received by an employee including company cars, holiday vouchers, accommodation, bills paid and domestic staff. Certain exemptions are permitted, such as company pension scheme contributions, pool cars, crèche facilities, mobile phones (although not for personal calls), car parking and interest-free loans. The first GBP1,000 of taxable benefits is also exempt.
Employers need to establish the difference between how much a company car is used for business and non-business purposes. If a car is used 75% or more for business, then it will attract a lower rate of tax. The employer also has to value accommodation provided to employees if it is not on the open market, and then calculate the best method of assessment.
There are a number of allowances, including minimum levels of taxable income, single and married allowances, earned income relief, etc etc. Interest or other receipts which have already been taxed in Jersey are excluded from the tax assessment. However, in an effort to raise additional revenues with the elimination of corporate tax, the States has agreed to phase out allowances for high earners. These changes, known as ‘20% means 20%’ mean that allowances are being withdrawn over five years for those on high incomes. Tax exemptions and allowances were frozen for year of assessment 2006. Personal tax allowances for the better off started to be phased out from 2007, in 2011 allowances were phased out fully.
Details of income and the allowances claimed have to be returned to the Comptroller of Income Tax every year on a form supplied by him. Forms must be returned to the Comptroller within 60 days of their issue. A late filing fee has been introduced for those taxpayers who do not submit an Income tax Return by the last Friday in May. In the 2010 budget this fee was increased to GBP250 from GBP200. Where a tax agent submits a Tax Return on a taxpayers behalf the deadline is two months later.
From January 1, 2006, income tax is collected for employees, directors and labour only sub-contractors under the Income Tax Installment System (ITIS).
Under ITIS employers are responsible for deducting tax at each pay day, in accordance with an effective rate of tax applicable to each employee or director. Effective rate notices are issued to employees and directors by the Income Tax Office. Without an effective rate notice, an employer is legally bound to deduct 20% from an employees wages.