Jersey, Channel Islands

Corporate - Deductions

Last reviewed - 15 January 2024

Normally, business deductions are allowed if they are incurred wholly and exclusively for trade purposes.

Depreciation and depletion

Capital allowances are available using the diminishing-balance method on machinery and equipment, including vehicles, at a rate of 25%. For this purpose, all such assets are pooled, and the allowance is calculated by reference to the value of the pool.

On disposal of an asset, the lower of cost and sale proceeds of the asset is deducted from the pool. A balancing charge is levied if the proceeds exceed the balance of the pool.

Motor vehicles over a certain value and greenhouses are subject to special rules and are not pooled with other assets.

By concession, an alternative is to claim the full cost of replacement in the year of replacement.

Capital allowances are not applicable to buildings or the depletion of natural resources.


Goodwill expenditure is non-deductible for Jersey income tax purposes.

Start-up expenses

Once a company has commenced its trade, start-up expenditure will be deductible for tax purposes if it is not capital in nature and has been incurred wholly and exclusively for trade purposes.

Interest expenses

Interest expense will be deductible if it is incurred for the purposes of a trade or is paid in connection with a loan taken out for a qualifying purpose. Interest relief may be restricted if the interest exceeds the amount that could reasonably be expected to be charged on a commercial basis.

Bad debts

Trading bad debts are normally deductible for Jersey income tax purposes unless they relate to a general provision.

Charitable contributions

Charitable contributions are generally non-deductible for tax purposes, unless the contribution itself provides a benefit to the trade (i.e. marketing).

Fines and penalties

Fines and penalties are generally non-deductible for tax purposes.


Local income tax paid is not deductible in computing taxable income. ISE fees paid are a tax-deductible expense.

Net operating losses

No distinction is drawn between different types of income or losses arising from different trades or sources, apart from Jersey property income, which is separately streamed.

Unrelieved losses may be carried forward and used to offset profits in future accounting periods. Alternatively, losses can be group relieved to group companies in the same income tax rate band.

There are only very limited circumstances where a company can obtain relief for carrying back losses.

Where a company has sustained a loss, this loss can be carried forward indefinitely and can be set off against future profits in respect of the same trade.

Payments to foreign affiliates

There are no withholding taxes (WHTs) on patent royalties paid by Jersey companies to non-residents.