Jersey, Channel Islands
Individuals who are resident and ordinarily resident in Jersey are liable to Jersey income tax on their worldwide income; however, individuals who are resident but not ordinarily resident in Jersey are taxed on Jersey-source income, and overseas income is subject to tax to the extent that it is remitted to Jersey.
A person who is not resident in Jersey is liable to Jersey income tax on Jersey-source income, except for some specific exemptions, including Jersey bank interest, interest received from a Jersey resident company, profits and earnings of the office of the director of a company, and dividends received from Jersey companies to the extent they are paid out of profits taxed at 0% on the company.
Personal income tax rates
Tax is payable at the rate of 20% on net income after allowances.
Alternative tax calculation
In Jersey, an alternative means of computing tax liability by reference to a marginal rate is undertaken automatically by the tax authorities. For the marginal rate calculation, the exemption limit is deducted from the taxpayer's income along with any relevant additions to the exemption limit, as listed in the Deductions section. Tax is then computed at the marginal rate of 26%. The taxpayer’s liability is based on the lower of the tax payable at the 20% rate and tax calculated using the marginal rate.
Taxation of wealthy immigrants
There has historically been a very attractive base for taxing the income of wealthy immigrants granted a housing licence under 1(1)(k) or 2(1)(e) of the relevant housing legislation. Even more attractive rates were introduced in July 2011. The later rules only apply to people receiving 1(1)(k)/2(1)(e) status after the new law came into force, although those who received consent under the former rules can elect into the 2011 regime, providing they meet certain criteria.
People who became 1(1)(k) residents before July 2011 are taxed on Jersey-source income at 20%, while non-Jersey-source income is taxed as follows: at 20% on the first 1 million pounds sterling (GBP), reducing to 10% on the next GBP 500,000, and 1% on the balance.
Under the rules introduced in 2011, there is no longer a distinction between the rates of tax charged on Jersey-source income and non-Jersey-source income. All Jersey property income will be subject to tax at 20%. For other income, the first GBP 725,000 is subject to tax at 20% and the balance at 1%.
With some simple pre-residence and fully disclosed planning, it is possible to restrict income tax liabilities to GBP 145,000 per annum.