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L'înformâtion et les sèrvices publyis pouor I'Île dé Jèrri

Marginal relief calculation of personal tax

​​​​Marginal relief explained

Personal income tax in Jersey is based around a 20% rate of tax with limited deductions and allowances.

A separate calculation called 'marginal relief' protects lower to middle income earners from paying too much tax.

Marginal relief is calculated at a higher rate but includes more deductions (the tax exemption threshold and other deductions) than the standard 20% calculation. We always work out your tax using both calculations and you always pay the lower calculation.

This means:

  • if your income is below the exemption threshold you pay no tax
  • if your income is just over the exemption threshold you pay a relatively small amount of tax
  • as your income increases you pay gradually more tax (depending on other tax deductions you may claim)
  • you will never pay more than 20% income tax on your total income in the year   

The video explains how marginal relief works.​​

Download a simple guide to marginal relief: 2014 year of assessment (size 3mb)

​​

​Marginal rate, tax exemption threshold and other marginal deductions

2015 Marginal rate

26%

2015 Tax exemption thresholds

These keep you from paying tax if you are on a low income. They are also used as a deduction for the marginal tax calculation.

  • single person: £14,200
  • married persons / civil partners: £22,800
  • single person over 65 years of age: £15,900
  • married persons / civil partners over 65 years of age: £26,100

Other marginal tax deductions

The exemption thresholds are increased if you're entitled to any of the following allowances or reliefs:

  • lower child allowance (child at school): £3,000
  • enhanced higher child allowance (child in higher education): £9,000
  • additional personal allowance (single parent): £4,500
  • wife’s earned income allowance (wife working): £4,500
  • civil partner earned income allowance (civil partner 'b' working): £4,500
  • child care tax relief (per child): £6,150
  • enhanced child care tax relief for pre-school age children (per child): £12,000 
  • qualifying maintenance payments (£2,600 max) 
  • qualifying interest tax relief ​(£15,000 max)

​Example calculations​

The following examples show the differences in tax between the standard tax calculation and the marginal rate calculation.​

Calculations for a single person

Standard tax calculation​ Marginal relief calculation
Income£15,000Income£15,000
  Minus: exemption threshold£14,200
Taxable income = £15,000Excess =£800
Tax payable £15,000 x 20% =  £3,000Tax payable £800 x 26% £208

The amount of tax due is the lower of the two calculations, so £208. This means you would pay around 1.4% tax on your total income.

Standard tax calculationMarginal relief calculation
Inco​me£70,000Income£70,000 
  Minus: exemption thresh​old £14,200 
Taxable income = £70,000Excess =£55,800
Tax payable £70,000 x 20% =  £14,000Tax payable £55,800 x 26% =  £14,508

The amount of tax is the lower of the two calculations, so £14,000. This means you would pay around 20% tax on your total income.

Calculations ​​​for a married couple with one child. The ​wife is not working 

Standard tax calculationMarginal relief calculation
Income£35,000Income£35,000
 ​ Minus: exemption limit£22,800
Minus: child allowance (1 child) £3,000Minus: child allowance£3,000
Taxable income =£32,000Excess =£9,200
Tax payable £32,000 x 20% =£6,400Tax payable £9,200 x 26% = £2,392

The amount of tax due is the lower of the two calculations, so £2,392. This means you would pay around 7% tax on your total income.

Standard tax calculationMarginal relief calculation
Income£105,000Income£105,000
  Minus: exemption limit£22,800
Minus: child allowance (one child)£3,000Minus: child allowance£3,000
Taxable income =£102,000Excess =£79,200
Tax payable £102,000 x 20% =£20,400Tax payable £79,200 x 26% =£20,592

The amount of tax is the lower of the two calculations, so £20,400. This means you would pay around 19.5% tax on your total income.

Calculations for ​a couple in a civil partnership both working full time with a mortgage on their home of £300,000 paying interest of 3%

Standard tax rateMarginal relief calculation
Income£60,000Income​£60,000
 Minus: exemption limit£22,800
  Minus: civil partner 'B' earned income relief£4,500
 Minus: interest relief (300,000 at 3%)£9,000
Taxable income =£60,000Excess =£23,700
Tax payable £60,000 x 20% =£12,000Tax payable £23,700 x 26% =£6,162

The amount of tax is the lower of the two calculations, so £6,162. This means you would pay around 10% tax on your total income.

Standard tax rateMarginal relief calculation
Income£160,000Income£160,000
 Minus: exemption limit£22,800
  Minus: civil partner 'B' earned income relief£4,500
 Minus: interest relief (300,000 at 3%)£9,000
Taxable income =£160,000 Excess =£123,700
Tax payable £160,000 x 20% = £32,000Tax payable £123,700 x 26% = £32,162

The amount of tax is the lower of the two calculations, so £32,000. This means you would pay around 20% tax on your total income.

Calculations for a married retired couple over the age of 65, both with pension income in their own right

Standard tax rateMarginal relief calculation
Income£35,000Income£35,000
 Minus: exemption limit£26,100
  Minus: wife's earned income relief£4,500
 
Excess =£4,400
Taxable income =£35,000   
Tax payable £35,000 x 20% =​£7,000Tax payable £4,400 x 26% = £1,144

The amount of tax is the lower of the two calculations, so £1,144. This means you would pay around 3% tax on your total income.​​​​​​​​​​​​​​​

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