IoM 2010/11 Budget Increases Individual Taxation
Thursday, February 18, 2010
The Isle of Man’s Treasury Minister, Allan Bell, presented his ninth
budget in the island’s parliament, the Tynwald, on February 16. The budget
features lower public spending, increased individual taxation and the use of reserves to
offset the fall in tax revenues as a result of the change to the VAT sharing
arrangement with the UK.
Bell explained that the budget was the first installment of a five-year strategy
to rebalance government finances following the UK government’s announcement
that it would be reducing the amount of VAT apportioned to the island under
the two countries’ VAT sharing agreement.
The salient features of the 2010/2011 budget include:
- A GBP37.1m, or 6.5%, reduction in net revenue spending overall (but with
no decrease in net spending on health and social care);
- A 2% increase in the higher personal income tax rate to 20%,
from 18%, raising an additional GBP9.4m;
- A 1% increase in employee National Insurance Contributions (approved by
Tynwald in November last year), raising GBP7m; and
- A GBP15m transfer from Reserves.
Bell also announced an 18% increase in Personal Allowance Credit for the least
well off, a 1% increase in income tax personal allowance, GBP96m capital spending,
a freeze on salary budgets and the loss of nearly 100 staff posts by non-replacement.
“This is a Budget that paves the way for change while
maintaining support for the least well-off in our society. There are further
and greater challenges ahead, but we now have a clear plan to manage the transition
to a new era of government fit for the future,” Bell explained.
“The Isle of Man is not alone in facing fiscal difficulties, but we
are in a relatively strong position. Our economy is still healthy and we are
a resilient and resourceful small nation with a track record of working together
to make the most of changing circumstances.”
Other noteworthy measures in the Budget include:
- The non-resident personal allowance is to be withdrawn.
- An increase to the Personal Allowance Credit from GBP550 to GBP650 per person or GBP1,300 per couple (18%).
- The tax cap will be increased by 15% to GBP115,000 per person per annum.
- The cap on Mortgage and Loan Interest relief will be reduced by GBP5,000 to GBP10,000
per person per annum, providing relief on up to GBP200,000 of mortgage or
loan per person at a 5% rate of interest.
- Corporate tax rates are unchanged.