Historically taxpayers paid tax on a Prior Year Basis of Taxation (PYB). Meaning, that the tax paid in a said tax year was allocated to the previous tax year. For example tax paid in 2018 was allocated to the 2017 tax liability.
For those that registered for tax from 2006 a new system was set up that meant these taxpayers paid on a Current Year Basis of Taxation (CYB). Meaning, that tax paid in a said tax year was allocated to that year. For example tax paid in 2006 was allocated to the 2006 tax liability.
The tax system has continued running a mix of PYB and CYB taxpayers for many years since the changes made in 2006. Which is not ideal from an administrative point of view.
On the 4 November 2020, the States Assembly agreed that all PYB taxpayers would change to a Current Year Basis (CYB), namely Pay as you Earn (PAYE). Therefore aligning all registered taxpayers. For any PYB taxpayers this change meant all taxes paid in 2020 that has been initially allocated to the 2019 tax liability was re-assigned to the 2020 tax liability instead.
For PYB taxpayers this meant that no tax payments have therefore been allocated against their 2019 liability. This has left a lot of PYB taxpayers with a 2019 ‘frozen’ tax liability until it is paid off separately.
In order to recover the 2019 ‘frozen’ tax liability Revenue Jersey understood that this debt could not
be payable immediately and therefore issued three payment options. Taxpayers originally had until
30 September 2024 to decide which option applies and make an election.
The New Deadline & Payment Options
You now have until 30 September 2026 to make a decision on which payments option to choose. Subject to States approval the start of the scheme has been deferred from 2025 to 2027.
The options are as follows;
- You agree a payment plan with Revenue Jersey. The plan starts in 2027 and you can spread the payment of your 2019 tax over any number of years up to a maximum of 17. Although the plan can be agreed and put in place now. You can pay by direct debit or make periodic payments depending on whether your income varies from month to month but you must make a minimum of 1/17 th payment each year if making periodic payments – the final date being 31 December 2043 ;
- You can pay a lump sum payment by 30 September 2026 (either as one lump sum or a series of payments) and
- You can commit to pay on your retirement (only available if you have not yet reached pensionable age) – with this option you will need to declare that you have a financial investment product or an asset that will give you the means to pay your liability within 12 months of you reaching pensionable age.
In exceptional circumstances and if retired then you can apply to defer any balance due to be paid from your Estate.
How we can help
Bracken Rothwell is happy to discuss the best option for you and make a proposal to Revenue Jersey on your behalf. If you would like us to assist please let us know as soon as possible. This will allow us time to make the relevant election before the deadline on 30 September 2026.
Please contact Giles Morison on 01534 511770 or Mandy McLean on 01534 511741 to discuss this further.
