Wednesday, October 11, 2017
Gavin St Pier, the President of Guernsey's Policy and Resources Committee, has asked higher earners and businesses to make a greater tax contribution in the island's 2018 Budget.
The 10 percent intermediate corporate income tax rate will be extended to income derived by investment managers providing services to individual clients. The 10 percent band will not apply to investment management services provided in connection with collective investment schemes.
Commercial tax on real property will rise by five percent, and domestic tax on real property will rise by 10.2 percent.
A new category of commercial tax on real property will apply to offices used by lawyers, notaries, and other independent legal professionals. The new category, which raises rates for legal services accommodation by 200 percent, will not apply to legal professionals employed by public authorities, and certain non-commercial legal service providers.
The personal allowance for 2018 will rise by five percent to GBP10,500 (USD13,875), maintaining Guernsey's personal tax competitiveness with other Crown Dependencies and the UK. There is no increase in the age related allowance. Married couples and civil partners may automatically transfer any unused personal or age related allowance between themselves.
To fund the personal allowance increase, income tax allowances will be withdrawn for higher earners at a rate of GBP1 for every GBP3 a higher earner's income exceeds the Social Security Upper Earnings Limit (recommended to be GBP142,896 in 2018). The withdrawn income tax allowances are: Dependent Relative Allowance, Infirm Person's Allowance, Housekeeper Allowance, Charge of Children Allowance, and Mortgage Interest Relief.
The limit for tax relief on pension contributions in 2018 will be lowered from GBP50,000 to GBP35,000.
Duty will rise by five percent on alcohol, 7.8 percent on cigarettes, 10.3 percent on other tobacco products, and 5.5 percent on fuel. There will be no change to document duty.
To attract high net worth individuals and to stimulate the "open" property market, a new lower tax cap of GBP50,000 is proposed for new residents who have paid a minimum of GBP50,000 in document duty on the purchase of a property on Part A of the open market register. On current document duty rates, this will require the purchase of a property with a minimum value of approximately GBP1.5m. The cap will be available in the year permanent residence is taken up and then three consecutive years. This cap will have the same conditions as currently apply to the income tax cap of GBP220,000.