30 October 2018
Jersey’s 2019 Budget has been developed by the Treasury and Resources Minister with three core principles in mind: that the government should ensure its actions are affordable, that it should maintain a balanced approach and that it should apply common sense in all areas.
The most significant measures this year relate to changes in the administration of tax and the introduction of Revenue Jersey, a new revenue administration within the States Treasury and Exchequer department, which is intended to bring together the administration of the States revenue streams.
The key highlights are:
Revenue Jersey/Revenue Administration Law
The States intend to create Revenue Jersey, which will initially bring together work and officers from the Taxes Office, Social Security Contributions teams and Customs Revenue teams.
In addition, a new Revenue Administration Law is being established. The first tranche of changes includes the following:
Business Tax Proposals
Economic substance test
New legislation is to be drafted introducing an economic substance test for companies that are resident in Jersey, with effect for accounting periods beginning on or after 1 January 2019. A consultation was published in August and discussions have taken place with the EU Code of Conduct Group regarding the proposals. The draft legislation was published on 23 October 2018 and guidance notes are due to be published.
Large corporate retailers (LCRs)
The 2018 Budget introduced a tax on LCRs and broadened the definition of financial services companies so that more companies are subject to tax at the rate of 10%. The new rules only apply to profits arising from 1 January 2018 and companies can claim relief where the rules result in them being subject to tax on profits before this date. However, to claim relief companies had to change their accounting date to 31 December. As this can be burdensome and costly for companies which are part of a larger group, proposals will now allow companies to elect to calculate their tax liability for the 2018 year of assessment as if they had a 31 December accounting date. 31 December will be regarded as the company’s accounting date for subsequent years too and any change from that date will be dealt with under the normal rules governing change of accounting date.
Personal Tax Proposals
Higher Child Allowance
High Value Residents (HVRs)
New HVRs are expected to have taxable income of £725,000 per annum generating an annual tax liability of £145,000. Where the HVR fails to generate this level of income, they are treated as receiving deemed income, topping up their taxable income to the expected level.
Currently, income from Jersey rental properties is not taken into account when calculating whether an HVR has reached the expected taxable income. From 2019 it is proposed that such income will be included. The income from Jersey rental properties will continue to be subject to tax at 20%.
Taxation of non-resident individuals
Non-residents in receipt of Jersey source pension and/or property income are subject to tax at 20% on the full amount of income received. In many circumstances this tax will be deducted at source. However, targeted relief is to be introduced entitling non-resident individuals to claim to reduce the amount of Jersey tax that they pay on that income where those individuals have a low worldwide income or the income is subject to genuine double taxation.
Stamp duty/Land transactions tax (LTT)
A number of changes have been made to help first time buyers, including:
For more information please contact David Osborne, Head of Tax at Baker Tilly Channel Islands, on firstname.lastname@example.org or DL: +44 (0)1534 755 106
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