Income Tax in Jersey
Jersey adopted a new income tax system on 1st January 2006.
It is an Income Tax Instalment System more commonly known as ITIS. It is not ‘Pay As You Earn’ (PAYE) – the system used in the UK.
All employees and new arrivals to the island must register with the Income Tax Department for an assessment before starting work. All employees still complete Income Tax Returns.
Employers know each employee’s tax rate eg. 8% or 11% and they will deduct accordingly from the monthly wage packet.
The maximum deduction rate is 20%, however it could be more if arrears, surcharges or penalties are owed.
If an employee hasn’t registered with the Income Tax Office they will automatically have a default amount deducted from their salary. This varies (currently 15%).
Sub-contractors’ rates do not vary. They are set at 15% 2006/7 to 20% in 2008.
However for everyone, the amount deducted is only an approximation. Any underpayments will be added to the following year’s deductions. Any overpayments will reduce the following year’s rate.
Employers taking on new employees need to register with the Income Tax Department within one month.
New employees such as school leavers or people arriving in Jersey will be taxed on the current year, as they will not have previous year’s liability.
Pensioners, self-employed or people living off investment income are not within ITIS. They will have to pay up to 50% of their previous year’s liability by the end of April.
Employers must keep detailed records of tax deductions, which are submitted to the Income Tax Office within 15 days of the end of each calendar month.
Employees are given the information at the end of the year or when they leave the job.
20% means 20%
‘20% means 20%’ is yet to be approved by Jersey’s government (the States).
It would mean phasing out tax allowances for high earners over the next three years to safeguard the island’s economy.
For example:
A married couple with two children who earn a combined salary of £180,000 currently pay 16% tax. In 2009 they will pay 20%.
Whereas a married couple with two children who earn a combined salary of £50,000 and pay 6.6% tax will still pay 6.6%.
Information provided on these pages is intended for general information
purposes only and does not constitute legal or other professional advice.
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