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Planning income tax payments around your retirement

‚ÄčIf you are retiring or thinking of retiring you may wish to contact us for advice.

We can assist you to make provision for future bills. Options include increasing your effective rate while you are working to accelerate payments in the years before retirement, setting up a direct debit when you retire to replace the ITIS deduction, or perhaps a combination of both.

Different rules will apply to you, depending on when you registered for Jersey tax.

If you registered for Jersey tax on or before 31 December 2005

You will be paying tax on a previous year basis. In other words, any ITIS payments you are making in the current year are being set off against last year's tax bill. Therefore, when you retire you may have a balance to pay at the end of the year. You will also need to make provision for the following year's tax bill which will include employment income that you are no longer receiving.

If you registered for Jersey tax after 31 December 2005

You will be paying tax on a current year basis. In other words, any ITIS payments you are making in the current year are paying the tax due on your employment income in the same year as you are earning it. When you retire you may want to make provision for any tax due when you start to receive a pension, which is not collected by ITIS.

If you are still employed, but are also now receiving a state pension

Your standard ITIS percentage rate will only collect the proportion of tax due from your employment income. You may therefore need to make a balancing payment at the end of the year. Alternatively, you can voluntarily increase your ITIS percentage or set up a direct debit to pay the difference.

What if I am self employed?

If you are self-employed and decide to retire you will also need to make provision to settle your previous year's tax bill. As self-employed people do not pay their tax under the ITIS system, payment is required in full by cheque. Alternatively you can set up a direct debit in advance to pay the tax in instalments by the due date.

What happens when I stop working?

Once you stop paying tax under ITIS (ie your employment ceases), you will need to settle future tax bills by payment on account. 'Payment on account' means that we send out a demand for approximately half of your tax bill in April with any remaining balance due by the first week of December. Alternatively, you can set up a monthly direct debit to pay your tax over the course of 12 months.

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