Shifting Paradigms in Taxation
On the 15 September 2021, the States Assembly approved the first legislative changes for Independent Taxation. Since 1928, when the taxation system was first introduced, all married couples, civil partnerships, were jointly assessed in Jersey. Most typically used one combined return or in some cases using separate tax returns for the couple).
Transition to Independent Taxation
Starting on 1 January 2022, individuals arriving on the Island or entering into marriage or civil partnership after 31 December 2021 will face individual taxation.
A proposition was lodged in January 2024 for the final stage of moving to Independent Taxation. If the States Assembly approves the legislation, Independent Taxation will become mandatory from 2026, and individuals not yet selected for independence will be automatically subject to individual taxation.
Implications of Independent Taxation
This effectively means that everyone will have to file their own tax return soon and pay their own taxes.
The effect of the election could create significant savings for some married couples or civil partners. However, they could create significant increases in the total tax due for others.
Compensatory Allowance
The draft legislation creates a compensatory allowance formula to ensure that tax bills for couples do not suddenly increase. This allowance is due to be in place for at least 10 years. However, the allowance is being reviewed before the end of year 8.
You can elect to go independent sooner if it is more beneficial to do so but you will not qualify for the compensatory allowance if in fact your total tax due is higher under Independent Taxation.
Elections are now available for 2025. You must make these by September 30, 2024.
Seeking Professional Guidance
Bracken Rothwell can work with you to determine whether you are likely to have a combined tax savings by going independent sooner.
Please get in touch if you would like us to review your position this year to determine whether it may be in your interest to elect to become independent for tax purposes sooner.
If you have any questions, please contact Giles Morison on 01534 511770 or Mandy McLean on 01534 511741.
