10 November 2005
Next steps in Income Tax
Instalment System (ITIS)
The majority of employees in Jersey should now know how much money will be deducted from their pay packets or salary cheques when the Income Tax Instalment System (ITIS) commenced on January 1, 2006.
The first, and biggest phase of introducing the new system for paying Income Tax has been completed with the delivery of over 35,000 letters to all employees and company directors; the largest group of taxpayers in Jersey.
The letters inform people what percentage (the ‘effective rate’) of their salary will be deducted from their pay packet each pay day. This rate is based on their 2004 tax bill and will go towards paying their 2005 tax liability.
The Income Tax Office will shortly be contact the next large group of taxpayers, the self employed, pensioners and investment holders. These people will receive formal notification in January that they must pay their 2005 income tax bill in two instalments – April 2006 and September 2006.
A further piece of work which has been completed is the processing of exemption certificates for labour only subcontractors in the building industry.
The Income Tax Office has also recognised that employers may need help in producing the information the Office needs. It has produced software, supplied on CD, for installation on most standard PC’s. This is available free of charge from the Income Tax Office. ITIS compliant payroll systems will not require this software.
The Income Tax Office is taking all possible steps to make people aware of the way the new system will work through advertising, information leaflets and a telephone help desk. This also includes translating some leaflets for the benefit of Polish and Portuguese nationals.
The introduction of ITIS has involved a considerable amount of complex legal, administrative and operational work for the Income Tax Office. It also coincides with other significant changes, including the EU Savings Directive, and the withdrawal of interest tax relief.
Comptroller of Income Tax, Malcolm Campbell, paid tribute to the staff of the Income Tax Office:
‘This has been the biggest change in the way we deal with income tax in Jersey for 40 years and it has meant a huge amount of work. We have used our resources to reorganise all our administrative processes and it has largely gone smoothly.’
He added: ‘I suppose it’s inevitable that we won’t get everything right, all the time, during such massive and rapid change. I am well aware that some Jersey names have been badly presented in letters to individuals, and I would like to personally apologise for any upset and distress caused. This particular matter has now been addressed and the Jersey names should now be properly displayed on the effective rate notices that are being issued in the future'.
Senator Philip Ozouf said:
'For years people have called for a tax instalment system that would enable us to contribute towards our tax bill throughout the year, and that would collect tax from all earners in Jersey – and that’s what is now being introduced.
It’s a testing time for the Income Tax Department. This small, highly professional department rightly enjoys an excellent reputation in the States and is performing its duties well despite the huge workload involved in this and other significant changes to our tax system. There will be a period of adjustment – it’ll take a bit of time to get used to a new way of doing things - but there’s no doubt this is a change for the better.’