19 November 2020
Following the States Assembly vote to move all Prior Year Basis (PYB) taxpayers to Current Year Basis (CYB), Revenue Jersey is writing to affected Islanders to update them. The letters – to PYB and pay on account taxpayers – will arrive over the coming days and will confirm the change and set out the next steps.
The vote means that all the payments that PYB and pay on account taxpayers have made in 2020 to pay their 2019 tax bill will instead be used to pay their 2020 tax bill. Their 2019 tax bill will be ‘frozen’ and they will not need to begin paying it until 2025.
In addition, taxpayers who pay their taxes ‘on account’ do not need to make their usual November payment, but they can if they wish to do so.
The letter makes it clear that there are four steps to complete before PYB taxpayers will have certainty about whether they have a credit or balance to pay when they become a CYB taxpayer. These steps are as follows:
Revenue Jersey will complete all 2019 return assessments, which will confirm the amount of tax that will be frozen.
Revenue Jersey will make the 'switch over' for PYB taxpayers to become CYB and all payments made to cover their 2019 tax liability will be moved to cover their 2020 tax bill.
From January, taxpayers can file their 2020 tax return. Filing online using the one.gov.je
portal is quick and easy, and it helps to speed up the assessment process, as the tax return doesn’t need to be inputted manually.
Revenue Jersey will start assessing the returns for former PYB taxpayers in a ‘date received’ order, from February 2021. They will check the tax paid in 2020 against the tax owed for 2020. Taxpayers will then receive their assessment and, if they pay by ITIS, a revised ‘CYB’ rate. It is at this point they will know if they have a balance to pay or a credit.
Comptroller of Revenue, Richard Summersgill, said: “Understandably, a lot of customers are calling, wanting to know if they are in credit or owe tax. We have completed months of work in preparation to put us in the best place to make the change to CYB, but, it’s just impossible to confirm anyone’s 2020 CYB tax position until we receive their 2020 tax return.
“I am asking taxpayers to be patient with the process rather than call us on this matter as the calls are diverting staff from completing the 2019 returns. I hope that in explaining our four steps, customers will understand and support our staff as they work to deliver the changes.”
Payment terms for paying the frozen 2019 tax liability are still being developed and will be debated by the States Assembly in early 2021. However, it is likely PYB taxpayers will have two options:
- Pay their 2019 tax bill in instalments over 20 years. The payment plan will start in 2022, but there will be no need to make any payments until 2025, after which regular payments would be expected
- Pay their 2019 tax bill when they reach States Pension Age, provided they can show they have a financial arrangement in place to do so.
PYB taxpayers will not need to choose which option to use to pay their 2019 tax bill until 2022 at the earliest. Those customers who wish to, will be able to make a lump sum payment to clear their 2019 liability rather than defer the payment, from February 2021 onwards.
Minister for Treasury and Resources, Deputy Susie Pinel, said: “I understand that many PYB taxpayers will want certainty on what all the changes mean for them financially. I want to reassure these Islanders that they do not currently need to take any action because of this change, other than prepare to file their 2020 return promptly and online if possible.
“As we continue to work on the payment terms and bring them to the States Assembly for debate in early 2021, I also want to reassure the public that we have already, and are continuing to take into account Islanders’ concerns and suggestions received from the survey, focus groups, emails to me and the department, tax professionals, and feedback from Assembly Members.“