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Concession and practice: Personal tax 11 to 20

Go back to concession and practice: Personal tax 1 to 10 

P11: Sums paid as compensation for personal injury 

As a general rule a lump sum payment received as compensation for personal injury is not chargeable to income tax. The fact that it is calculated by reference to past or future earnings is irrelevant. Additionally, 'structured settlements' providing for periodical payments of personal injury, arising from a road accident, medical negligence or disease and impairment of physical or mental condition, made by a Jersey or UK court, will similarly not be chargeable to tax.

P12: Sums paid as compensation for loss of earnings

Compensation or damages for loss of earnings as a result of sickness or injury to mind or body does not arise from the employment and is not taxable.

P13: Benefits under a permanent health insurance policy

Sickness, invalidity and accident benefits payable under a permanent health insurance policy are not exempt from tax. However, no assessment will be made on the benefits payable for the first eighteen months. The concession does not apply to sums payable to an employee by virtue of their employer’s permanent health insurance policy. 

P14: Directors' class 2 social security contributions

Tax position for years of assessment up to and including year of assessment 2012

Where a director of a company which is conducting a trade or profession is liable to pay Class 2 Social Security contributions and the cost of those contributions is met by the company, the sum is assessable on the director as a perquisite of their office or employment by virtue of Art 65 of the Income Tax Law. The sum may instead, be disallowed in computing the company's taxable profits. In practice disallowance is reduced by 52% (from 2002 and ensuing years), representing the notional "employer's contribution". 

Tax position from the years of assessment 2013 to 2018

For the years of assessment 2013 to 2018, notwithstanding Art 70 where a company pays Class 2 social security contributions on behalf of a director: 

  1. the company can deduct that cost when calculating its taxable profits;
  2. the director must declare as a pecuniary liability the whole of their Class 2 social security contributions paid by the company on their personal tax return; by concession the directors may claim a deduction in accordance with Article 70A 1A (b) for contributions calculated with reference to the difference between the standard monthly earnings limit and the upper monthly earnings limit of 100% or for Class 2 contributions not falling within the upper earnings limit 52% of the total contributions as an expense against their remuneration charged to tax, provided that the remuneration arises from a company conducting a trade or profession
  3. for those companies whose 2013 financial statements do not have a year ending 31 December 2013, the company's 2013 tax computations only need to reflect adjustments for the old method up to the 31 December 2012 and the new method from the 1 January 2013

Tax position from the year of assessment 2019

The concession is currently under review and the tax position from 2019 will be published shortly.

Concession P14 does not apply to a director of a company which is not conducting a trade or profession. In that event the total sum will be allowed in computing the company’s taxable profits and the total sum is assessable on the director as a perquisite of their office or employment.

P15: Salary sacrifice

Provided that the requirements set out below are met the Comptroller will deem a salary sacrifice to be ‘effective’. If it is ruled effective the amount of the salary sacrificed is not charged to tax on the individual. The comptroller will accept a sacrifice as being effective if:
  1. the remuneration is sacrificed before it is earned / received for tax purposes
  2. there is a revised contractual relationship between the employer and employee, the true construction of which is the employee is entitled to lower cash remuneration plus a benefit
  3. this revised contractual relationship is evidenced in writing and
  4. the employee is restricted from opting in and out of the arrangements at will 

Where a salary sacrifice is made for the provision of pension contributions under Part 19 of the Income Tax Law, those contributions must be an employer contribution for the salary sacrifice to be effective.

P16: Pecuniary liabilities and global assessments

Where an employer bears on behalf of employees and by virtue of their employment any pecuniary liabilities of the employees, such payments constitute assessable emoluments, whether made to the employees so that they received the monies in question, or made direct by the employer to the persons to whom the payments are due. It is immaterial, in such circumstances, whether the employer makes the payments voluntarily or under contracts of employment.

Where an employer wishes to bear the income tax liabilities on such payments, if the purpose is for reducing the administrative burden for both the employer and the taxes office, a global assessment may be raised on the employer.

A global assessment is the tax due (20% rate) on the aggregate of the pecuniary liabilities of all the employees. The tax paid by the employer will not be treated as additional emoluments of the employees.

We will determine the availability of a global assessment on a case by case basis.

The concession will be refused if we are of the opinion that the purpose of the request is outside the spirit of the concession, eg tax planning to reduce the overall tax contribution. Alternatively we may allow the global assessment but seek to collect the tax on the tax (grossed up at 20%) as part of the global assessment.

P17: Share schemes

These schemes which award options to buy shares at less than their market value to employees give rise to assessable emoluments.

Such emoluments have always been treated as perquisites and the method of assessing their value was unchanged by the introduction of benefit in kind legislation. By concession they are now treated as a benefit in kind.

P18: Deceased person, income of estate

Assessments in respect of investment income arising to the estate of a deceased person prior to the distribution of the estate will be raised upon the executor or administrator of the estate. However, where there is a sole residuary beneficiary, the executor or administrator can apply to have the estate income assessed on the beneficiary direct.
Income from an office or employment paid after a person's death is chargeable to tax on his executors.  If strictly applied, this could mean that the executors would have to pay more tax than would have been paid by the deceased had he lived.  By concession, remuneration paid after a person's death in respect of services performed before he died will be included in the assessment for the period up to the date of death.

P19: Interest tax relief

Details of interest tax relief concession and practice can be found by using the following link:

P20: Tax relief on interest paid overseas

There is statutory tax relief for certain types of interest paid to a bona fide bank (and, in practice, building society) carrying on business in Jersey.
With the exception of mortgage interest paid on loans entered into on or after 1st January 2004, this tax relief is extended by concession to include interest paid to a bona fide bank or United Kingdom building society carrying on business overseas. For the avoidance of doubt, no Jersey tax will be paid by those institutions on the interest they receive.

Go to concession and practice: Personal tax 21 to 28

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