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2020 budget tax summary

Finance Law

This is a summary of the main amendments made by the Finance Law 2020. You can find all the amendments on the Jersey Law website.

Finance (2020 Budget) Jersey Law

General amendments

No appeal if no return

Where a tax return has not been filed by a taxpayer an assessment will be raised by Revenue Jersey. 

No appeal can be made against this assessment, because no return has been filed. If a return is subsequently filed, the first assessment will then be set aside.

Shariah lending

The rules around the taxation of money lenders have been clarified to provide greater certainty for those engaging in Sharia financing transactions.

Shariah compliant funding

Personal income tax amendments

Income tax exemption thresholds

The standard exemption threshold increased from £15,400 to £15,900.

The married / civil partnership exemption threshold increased from £24,800 to £25,550.

Second earner's allowance

Second earner's allowance increased from £6,000 to £6,250.

2020 tax allowances and reliefs

Child care tax relief

The child care tax relief income disregard increased to £6,250 (the amount equal to second earner's allowance.

Child care tax relief now includes ISV income as qualifying income.

Long-term care

The long-term care rate has been increased to 1.5%.

ITIS maximum rates

Due to the increase in the long-term care rate the maximum amounts for the calculation of the ITIS rate are:

  • no arrears 22%
  • one year of arrears 27%
  • two years of arrears 32%
  • three of more years of arrears 37%

Removing the obligation to provide paperwork

Many of the existing obligations on taxpayers to provide evidence or papers supporting income tax returns has been removed, to support the move to online filing for personal taxpayers in 2020.

In future, Revenue Jersey will usually only seek additional evidence from taxpayers on a case by case basis.

Employers

Benefit in kind returns

Penalties for late returns have been extended to benefit in kind (BIK) returns, although penalties for BIK returns won't be issued in 2020.

ITIS returns

A late-filing penalty has been introduced for those (few) employers who may choose to file ITIS returns annually.

The Comptroller is given discretion not to serve a penalty notice.

Default rate

The default rate has been increased to 22%.

Corporate amendments

New requirement for a body corporate to notify Revenue Jersey  

Bodies corporate that either:

  • become Jersey resident; or
  • gain a Jersey source of income

are now required to notify the Comptroller within 6 months of the date the entity becomes liable to Jersey income tax.

Requirement to provide financial statements

All Jersey resident companies and all companies with a Jersey permanent establishment now have an obligation to provide financial statements.

This obligation arises out of the recent work on economic substance.

Economic substance for companies

Corporate returns

Following the removal of the requirement for a person to be chargeable to income tax when requiring a tax return to be delivered, from 2019 the following entities are now required to file a corporate income tax return:

  • Jersey-incorporated companies (whether or not tax-resident in Jersey)
  • Jersey foundations
  • foreign incorporated companies that are tax-resident in Jersey
  • foreign incorporated companies with a permanent establishment in Jersey

Filing deadlines and penalties will also apply.

Required to file a return

The Income Tax Law has been strengthened to ensure that:

  • foundations
  • Jersey incorporated entities that are not managed and controlled in Jersey

are required to file a tax return in Jersey.

This is important for ensuring compliance with the related Economic Substance legislation.

Payment on account for companies

The requirement to notify the Comptroller if the estimated payment on account amount is zero now only applies to ‘large’ companies (those with a tax liability exceeding £500,000 for each of the previous two years of assessment).

Pensions

Commutation

The existing practice for the commutation of certain pensions whereby the 30% commutation has to be in the form of a lump sum has been clarified.

GST

De-minimis amount

The GST de-minimis is reduced from £240 to £135, effective from 1 July 2020.

Land transaction tax

Electronic filing

The law has been amended to mandate electronic returns of Land Transaction Tax (LTT) from 1 January 2022, aligning with the existing requirements for property transactions subject to Stamp Duty.

This will enable legal professionals to return and pay both LTT and Stamp Duty in the same way.

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