Guernsey, Channel Islands

‘Principally resident’ and ‘solely resident’ individuals are both liable to Guernsey income tax on their worldwide income. ‘Resident only’ individuals are either taxed on their worldwide income or alternatively taxed on Guernsey-source income and can opt to pay a set charge of GBP 40,000 (GBP 30,000 prior to 2021) in respect of non-Guernsey source income and no additional liability will arise on this income in Guernsey.

The revised Guernsey-UK DTA (in force from 1 January 2020 in respect of Guernsey income tax) clarifies that an individual electing to pay the standard charge remains liable to Guernsey income tax on his or her worldwide income.

Personal income tax rates

Tax is payable at the rate of 20% on net income after allowances (see the Deductions section for a description of allowances).

It is possible for a Guernsey resident individual to elect for a cap on their income tax liability. Elections can be made for a liability cap of GBP 160,000 to apply for an individual or couple on non-Guernsey-source income, and the liability cap can be increased to GBP 320,000 if an election is made for the cap to apply to an individual or couples' worldwide income.

Furthermore, an election for a liability cap of GBP 60,000 can be made for individuals who purchase open market property on the island in excess of GBP 1,500,000 in the year they take up permanent residence. The cap is applied to an individual or couples' worldwide income and is also available for the three consecutive years after the year of arrival.

An encashment of a pension fund (i.e. both triviality payments and lump sum payments that are over the annual tax‐free lump sum limit) that comprises Guernsey tax relieved pension contributions shall be excluded from the income tax cap from 1 January 2020.

The annual tax-free lump sum limit for pensions schemes has been maintained at GBP 203,000.