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Concessions and practices for tax

About tax concessions and practice​

Extra-statutory concessions and practice

These pages contain the definitive list and descriptions of current administrative extra-statutory concessions as well as statements of practice given by Revenue Jersey.

You need to know that:

  • a concession won't be valid in any case where it is used to facilitate tax avoidance
  • the concessions don't affect your right of appeal on any point concerning your liability to tax
  • unless indicated otherwise, all references are to articles of the Income Tax (Jersey) Law 1961, as amended
  • 'Jersey bank interest' means interest credited to accounts maintained with banks and building societies operating in the Island
  • 'connected with' is used in the sense explained in Article 3A
  • Guernsey includes Alderney and Herm
  • concessions which are no longer in effect are published for information under historic tax concessions and practices

Article 3A: connected persons

For the purposes of this Law any question whether a person is connected with another shall be determined in accordance with the following provisions of this Article:

  1. A person is connected with an individual if that person is the individual’s spouse or civil partner, or is a relative, or the spouse or civil partner of a relative of the individual or of the individual’s spouse or civil partner.
  2. A person is connected with any person with whom the person is in partnership, and with the spouse, civil partner or relative of any individual with whom the person is in partnership.
  3. A company is connected with another person if that person has control of it or if that person and persons connected with that person together have control of it.
  4. A company is connected with another company if –

    • the same person has control of both, or a person has control of one and persons connected with the person, or the person and persons connected with the person, have control of the other
    • a group of 2 or more persons has control of each company, and the groups either consist of the same persons or could be regarded as consisting of the same persons by treating (in one or more cases) a member of either group as replaced by a person with whom the member is connected

In this Article “relative” means brother, sister, ancestor or lineal descendant.

Review of current concessions

If you were relying on any concession which isn't on the current list, you should have brought it to the attention of the Comptroller of Revenue by 31 December 2016.

Personal tax

P1: apportioning allowances: resident but not ordinarily resident

An individual who is resident but not ordinarily resident is assessed to income tax on income arising in Jersey and remittances of income to Jersey. From the year of assessment 2006 their personal allowances and reliefs are apportioned by reference to the number of days they are in Jersey. By concession, an individual may elect to declare their total gross world income, as a result of which, their personal allowances and reliefs will not be so apportioned.

The concession is restricted to an individual whose sources of income arising in Jersey consists of rent, a pension or bank deposit interest. 

​This concession applied for years of assessment up to 2021 and is replaced by new Article 129AA with effect from 1 January 2022.

​This concession applied for years of assessment up to 2021 and is replaced by new Article 129AA with effect from 1 January 2022.

This concession applied for years of assessment up to 2021 and is replaced by new Article 129AA with effect from 1 January 2022.

Individuals resident but not ordinarily resident in Jersey are assessable under Schedule D Case III (article 62 of the Income Tax law) in respect of foreign pensions on the basis of the full income arising in the year. All other foreign income arising to such individuals is assessable under Case V on the basis of remittances to Jersey. 

By concession foreign pensions will also be assessed under Case V on the basis of remittances provided that the individual demonstrates to the satisfaction of the Comptroller that the foreign pension is subject to taxation in another jurisdiction.

An individual may apply for a recurring source of UK income to be assessed on a UK fiscal year basis (ending 5 April) as opposed to a calendar year basis.

For example, the UK income arising in the fiscal year ending 5 April 2013 may be assessed for the year of assessment 2012. However, the UK income will be assessed on an actual basis for the year of commencement or cessation of the source of income. In addition, any new and ceasing residents will also be assessed in their year of arrival and departure on an actual basis.

​Example​£
​UK tax year 2013 / 2014 income​25,000
​UK tax year 2014 / 2015 income​30,000
Date of arrival in Jersey - 1 June 2013
Date of departure from Jersey - 1 February 2015
Year of assessment 2013
​£25,000/12 x 7 months (June to December 2013) =​14,583
​Amount to declare for the 2013 year of assessment =​14,583
Year of assessment 2014
​Actual basis
​£25,000/12 x 3 months (January to March 2014) =​6,250
​£30,000/12 x 9 months (April to December 2014) =​22,500
​Amount to declare for the 2014 year of assessment = (£6,250 + £22,500)​28,750
​or UK fiscal basis
​Amount to declare for the 2014 year of assessment =​30,000
​A change in the basis of the year of assessment will not be permitted after the second year
Year of assessment 2015
​£30,000/12 x 1 month (January) =​2,500
​Amount to declare for the 2015 year of assessment =​2,500

P7: bonuses for new and ceasing residents

Strictly, a bonus paid to an individual during a year of assessment in which they are resident in Jersey but relating to duties carried on abroad is liable to Jersey tax. However, by concession, no assessment will be raised upon the bonus providing:

  1. the bonus has been subject to tax in another jurisdiction
  2. the individual gives a written undertaking to pay Jersey income tax on any bonus relating to duties carried on in Jersey which is paid after they cease to be resident

P8: motor vehicle expenses, employees only

Where an employee is entitled to a deduction for expenses incurred in using a motor vehicle for their employment, full details of the expenditure may be claimed on a form issued by the Comptroller (form P87). If full details cannot be supplied, a flat rate allowance to include all running costs and capital allowances may be allowed based on the following mileage for employment purposes:

  • 60 pence per mile for cars
  • 30 pence per mile for motorbikes

An employee is not entitled to a deduction for motor expenses incurred in travelling between their home and their place of employment and vice versa. 

P9: cash awards on passing examinations

Where it is the practice of an employer to grant a cash award to employees in recognition of success in passing an examination, the cash award will not be regarded as liable to tax if all the foregoing conditions are observed:

  • the award is made at the discretion of the employer (the employer is under no legal obligation to make the award)
  • it is not part of the employee’s duties to sit and pass the examination (dismissal does not automatically follow failure)
  • the award takes the form of a lump sum paid once and for all
  • the award is reasonable in amount and there is no evidence to suggest that it represents disguised remuneration

P10: gifts and voluntary payments

Generally, voluntary payments or gifts made by an employer to an employee are assessable to income tax, except so far as it can be shown that there was a predominant personal element in the gift.

Full details must be provided to the Comptroller where it is contended that a voluntary payment or gift is not assessable to income tax.

P11: 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.

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.

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 Article 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 
  3. 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
  4. 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
  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, such as 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 their 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 they lived. By concession, remuneration paid after a person's death in respect of services performed before they died will be included in the assessment for the period up to the date of death.

Find details of concessions and practice for interest tax relief.

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 1 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.

P21: Pre 1997 maintenance payment increases

In the case of maintenance payments of less than £2,600 per annum made under orders or deeds dated on or before 31 December 1996 relief is capped for 1998 and later years at the level payable in 1997, as is the assessment on the recipient.

By concession, however, the cap will not be enforced except to limit the relief to £2,600 (or the amount paid, if lower). For example, if the amount payable is increased from £2,000 in 1997 to £3,000 in a later year, the relief will be increased to £2,600. The assessment on the recipient will nevertheless continue to be capped at the 1997 level, in this example £2,000.

P22: Commutation of overseas pensions

​Due to changes in a number of other jurisdictions, this concession no longer applies from 27 March 2015. The commutation of an overseas pension is now dealt with in Article 131OA of the Law.

Where an annuity is paid from a Jersey pension scheme or superannuation fund to a person resident outside the Island, tax must be deducted in accordance with the provisions of Article 87.

However, occupational pensions paid to Guernsey residents may be paid without deduction of tax if permission is sought from the Comptroller and evidence is produced that the pension will suffer Guernsey tax. 

P24: UK real estate investment trusts

By concession, Jersey resident individuals will be allowed to claim double tax credit relief against property income distributions arising from a U.K. real estate investment trust.

Stock dividends

From 1 January 2013 a stock dividend which falls within the definition outlined in Article 3 is not taxable in Jersey. The definition of a stock dividend is as follows:

  1. share capital issued by a company in consequence of the exercise by any person of an option conferred on the person to receive, in respect of shares of the company, either cash or additional share capital
  2. bonus share capital issued by a company in respect of shares in the company of a relevant class

For the period from 1 January 2009 to 31 December 2012, stock dividends were taxable in Jersey. Prior to 1 January 2009, stock dividends were not taxable in Jersey unless they were paid by a company which first became resident in Jersey, or which first had a permanent establishment in Jersey on or after 3 June 2008.

Dividend reinvestment schemes

In these types of arrangements (such as dividend reinvestment plan) the shareholder is entitled to a cash dividend, that cash dividend is then used to acquire further shares in the company.  The shareholder is liable to tax on the dividend irrespective of where the dividend arises and whether or not it is applied to acquire further shares.

An assessment will not be made on a person who is not resident in Jersey in respect of Jersey bank interest and a Jersey social security pension. However, if a non-resident relief claim is made in respect of other Jersey income, any Jersey bank interest and Social Security pension will be included in the computation as income subject to Jersey tax. If the computation results in a liability greater than the tax suffered by deduction and charged at the standard rate on other Jersey income, no action will be taken to collect the excess.

The concession in respect of Jersey bank interest is also extended to:

  • a non-resident person entitled to interest from designated accounts
  • trustees of trusts with non-resident beneficiaries
  • the attorney executor of the estate of a deceased non-resident
  • the executor of the estate of a deceased Jersey resident, to the extent that the income is payable to beneficiaries who are not resident in the Island

Tax position from the year of assessment 2009 onwards

Article 118B in the Income Tax Law provides for the exemption from income tax of the following sources of income arising to non-residents:

  1. Jersey bank deposit interest
  2. distributions made by a company regarded as resident in Jersey to the extent that such distributions were made out of profits or gains charged on the company at the rate of 0%
  3. a Jersey Social Security pension
  4. a purchased life annuity
  5. interest paid by a company regarded as resident in Jersey
  6. the profits and earnings of the office of director of a company (up to year of assessment 2022). From year of assessment 2023, the earnings and profits of short-term business visitors.​
  7. any royalty or other sum paid in respect of the user of a patent

P27: voluntarily increasing your ITIS rate

This concession applied for years of assessment up to 2020 and is replaced by Article 41CB with effect from 1 January 2021.

P28: deducting repairs from accommodation benefit

We are prepared to consider, on a case by case basis, whether the costs of repairs and capital improvement met by the employee are deductible from any accommodation benefit.

Business tax

B1: foreign tax on trading profits

This concession applied for years of assessment up to 2020 and is replaced by new Article 70C with effect from 1 January 2021.​

Capital expenditure is not deductible in arriving at chargeable profits. However, by long established concession, relief is granted for the cost of the replacement of machinery or plant, provided that no deduction of any kind was claimed for the original asset. This practical treatment is an alternative to capital allowances. A switch from the statutory to the non-statutory basis is not permitted.

The concession is conditional upon all of the plant and machinery used in the trade being subject to replacement allowances. In other words, no plant and machinery used in the trade shall be subject to a claim for capital allowances.

For avoidance of doubt, the cost of replacing articles, other than machinery or plant, employed in the trade is permitted by Article 70(d) of the Income Tax Law. 

This concession applied for years of assessment up to 2020 and is replaced by new  Article 106AB of the Income Tax Law with effect from 1 January 2021.

This concession applied for years of assessment up to 2020 and is replaced by new paragraph (2A) in Article 106A of the Income Tax Law with effect from 1 January 2021.

B5: schedule A: machinery for property maintenance

Where expenditure is incurred on plant and machinery in order to generate income which is taxable under Schedule A, relief will be available either by way of replacement allowances or, if a permanent choice is made, by way of capital allowances.

B6: capital allowances: investment holding companies

Relief for capital allowances is by concession extended to investment holding companies.

In the case of profits from fully furnished letting, a sum equal to 10% of the gross letting income may be deducted in arriving at the balance of profits assessable to income tax. This deduction is in lieu of claims to capital allowances computed in the conventional way and claims to the replacement allowance.

For such a claim to be granted, it would be expected that, to be classed as fully furnished, the following items would be supplied:

  • moveable furniture (such as beds, chairs, tables, sofas and so on)
  • television
  • fridges and freezers
  • oven
  • washing machine and dryer
  • carpets and other floor coverings
  • curtains
  • linen
  • crockery and cutlery

The list gives an indication of the assets which would be expected to be included in the property in order to justify a claim under this concession.

Entitlement to the 10% deduction does not depend on the provision of each and every item in the list, but the deduction is only due if fully furnished accommodation is provided. The provision of nominal furnishings will not meet this requirement. If the accommodation is not fully furnished, or only partly furnished, the 10% deduction of the gross letting income is not due. 

​This concession applied for years of assessment up to 2020 and is replaced by new  Article 110B of the Income Tax Law with effect from 1 January 2021.

Where, on the death of a spouse or civil partner, a business passed from the deceased to the surviving spouse or civil partner a succession to the trade has strictly occurred, necessitating the application of the cessation and commencement provisions.

However, these provisions will not be applied upon request by the executors or the surviving spouse or civil partner.

In that event the assessment for the year of death, computed on a continuing basis, will be time apportioned between the deceased and the surviving spouse or civil partner.​

From the year of assessment 2013 the carry forward of losses or capital allowances of the period prior to the date of death will be allowed to the surviving spouse or civil partner.

B10: farming: continuation of trade

If a farmer moves from one farm to another within a period of 12 months, their trade will be treated as having continued.​

However, a farmer who gives up some land but retains a part which is very different in size or character from their former land can have cessation and commencement provisions applied if they so wish.

​B11: lodgers: meals supplied

Where a guest house business does not have to register with the Minister for Economic Development, because not more than five guests are accommodated at a time, and it produces no trading accounts, the profit will be assessed as 50% of gross business receipts.

This basis will be used for guest houses fully or partially operating on terms which include the provision of food for guests whether on breakfast, half board or full board terms.

In cases where no meals are provided go to section B12. 

B12: lodgers: no meals supplied

It is acknowledged that in the case of small-scale lettings it is not always possible to formulate an expenses claim because records have not been kept, or there is difficulty in apportioning expenses between the let and owner-occupied parts of the property.

In such circumstances, the taxable profit will be taken as 75% of the gross rents plus any sums received by way of reimbursed expenses. This concessionary calculation of the assessment is in lieu of a claim to all expenses and capital allowances.

Where the statutory basis of calculation is already in operation for computing assessments, or becomes established in the future, no change to the concessionary basis will be allowed. 

B13: relief for Article 107/107A loss

Loss relief under Articles 107 and 107A is due in respect of the trading loss incurred in the year of assessment. However, by concession, relief is allowed in respect of the loss of the accounts year ending in the year of assessment except in any year that the trader requests relief on the statutory basis.

This concession does not apply to a company incorporated on or after 3 June 2008, from the year of assessment 2008, and for all companies (other than utility companies taxed at 20%) from the year of assessment 2009 as these companies are not entitled to loss relief under Articles 107 and 107A.

B14: business recovery

Where there is a full double tax arrangement in place with another jurisdiction, an enterprise of the other jurisdiction shall not be deemed to have a permanent establishment in Jersey, provided that the:

  • enterprise has only temporarily relocated to Jersey and solely as part of a business recovery plan
  • profits of the enterprise continue throughout to be charged to tax in its own jurisdiction

Where there is no full double taxation arrangement in place, requests of a similar nature will be considered upon application to the Comptroller. 

B15: bank interest arising to trading companies

Interest and dividends received by a trader are trade receipts only where it is an essential part of the trading operations to employ capital to produce such income. For example, interest on current accounts, trade interest and interest on short loans will normally rank as trade receipts.

However, in practice, the inclusion as trade receipts in company accounts of (small amounts of) bank deposit interest, but not dividends, is accepted.

Income arising to the liquidator of a non-resident company is not charged to tax except in the event that it is local source income, which is not statutorily exempt under Article 118B in the hands of a non-resident.

B17: partnership's contributions to partners' pensions

A partnership is not construed to be the employer of the partners and therefore any such payments by the partnership will not be allowed as a deductible expense from the partnership profits assessed to income tax. 

B18: grants under the employment grants scheme

The grant is taxable in the hands of the employer and must be included as part of the income of the business.

All payments made to the apprentice employee in respect of the duties they perform for the employer will be treated as wages to that employee (whether paid from the grant or from the employer’s own funds). The individual’s income tax instalment system (ITIS) effective rate must be applied against the wages that are paid.

The full amount of the wages paid will be allowed as an income tax deduction in the accounts of the employer. 

B19: rents arising to sole traders

Where a sole trader receives rent from a property owned or leased by them which does not form part of the distinct area of the property used by them for the purposes of their trade, the rent received and all expenses relating to the property must be eliminated from the computation of trading profits.

However, if there has been a long-standing practice to include the rent and expenses in the computation of trading profits that practice will be allowed to continue.

B20: Schedule A: alterations 

Where income is taxable under Article 51(1)(a) that part of an outlay which is equal to the estimated cost of any maintenance or repairs saved by alterations may be allowed as a deduction except in cases where:

  • the alterations are so extensive as to amount to the reconstruction of the property
  • there is a change in the use of the property which would have made such maintenance or repairs unnecessary

B21: key man insurance

Where an employer takes out a life insurance policy on the life of an employee to protect against any potential trading loss to the business on the death of such a key employee then:

  • the premiums are deductible in calculating the trader’s profits, and
  • any recoveries under the policies are chargeable to tax as part of the trading profits (whether or not the deductions have been claimed)

Where the shareholders of a company or partners in a partnership takes out their own personal life insurance policy for the benefit of the remaining shareholders or partners then:

  • the premiums are not an allowable business expense, and
  • the taxes office will determine the taxation of receipts on a case by case basis

B22: software expenditure 

Where it is appropriate to write off the cost of software as a revenue expense in one year having given due consideration to Generally Accepted Accounting Principles ('GAAP') and the financial statements follow this treatment then the Comptroller will allow the expenditure as revenue expenditure and agree a tax deduction in that year.

Alternatively where the expenditure on software is capitalised in the financial statements and GAAP requires that expenditure to be capitalised in the accounts, the Comptroller will not allow a one off revenue deduction but will treat the expenditure as capital expenditure incurred on the provision of plant.

B23: Group life insurance schemes

Article 70D allows an employer to claim tax relief for Schedule D Case I or II purposes in respect of contributions payable into a group life insurance scheme, but with two limitations:

  • death benefits cannot exceed five times the emoluments of the deceased employee in the year prior to death.
  • anyone with more than 20% interest in the employer company cannot be a beneficiary of the scheme.

By concession, in cases where one or more employee does hold a more than 20% interest in the employer company and are beneficiaries of the scheme, where the contributions payable to the scheme provider are calculated (by the scheme provider) on an individual employee basis, an employer company can continue to claim tax relief under Article 70D for contributions payable in respect of employees who have a 20% or less interest in the employer. 

For the avoidance doubt, where contributions are not calculated on an individual employee basis, and one or more employee in the scheme has a more than 20% interest in the employer, no relief will be claimable under Article 70D for any of the contributions payable.

Article 82A applies for the purposes of determining whether or not an employee has a greater than 20% interest in the employer company.

Tax Residence

​​R1: Place of abode in Jersey

An individual whose centre of life is abroad, in the sense that they have a home and business or professional activities abroad which keep them more or less continuously outside Jersey, will be regarded as resident but not ordinarily resident, unless the average period spent in Jersey amounts to or exceeds 3 months.

Where the individual's professional or business activities have ceased due to having retired from work, they will not be refused the concession if they can show that in the ordinary course of their life a permanent home is settled at one specific place abroad.

R2: Remittances: resident not ordinarily resident

This concession has been removed from 2001 and subsequent years of assessment in the case of income from an office or employment.

Where the remittance basis is in operation for individuals not ordinarily resident in Jersey, remittances in a year of assessment which include income which arose in a year when that individual was not resident in Jersey will not be assessed.

R3: New residents

This concession applied for years of assessment up to 2021 and is replaced by new Article 80A with effect from 1 January 2022.​

R4: Individual leaving Jersey permanently

This concession applied for years of assessment​ up to 2021 and is replaced by new Article 80A with effect from 1 January 2022.

R5: Resident crew of aircraft and ships

Services performed by the crew of aircraft and ships are deemed by double taxation arrangements to be performed in the territory in which the employer is resident. However, by reciprocal agreement between Jersey and Guernsey, an employee in this position is only taxed on their emoluments by the island in which they are resident.

Interest tax relief

I​1. interest on main residence: share transfer

Tax relief will be granted on the interest paid subject to the restrictions in Article 90AA of the Income Tax Law.

I2. Loans used in a business

If an individual or company can prove to the satisfaction of the Comptroller that all of the loan has been injected into a trade, business or vocation to continue to earn the profits of a trade, profession or vocation, and that none of it has been used for private and personal expenditure. Then the comptroller will grant tax relief as an expense incurred wholly and exclusively to earn the profits of the trade, profession or vocation.

However, where the loan has been used for a dual purpose (business and non business), tax relief will only be granted in respect of that part of the interest paid on the loan which is wholly and exclusively injected to earn the profits of the trade, profession or vocation.

I3. Management expenses and interest paid

Management expenses under Article 133 of the Income Tax Law relating to interest will be disallowed for private investment holding companies but will continue to be given for life assurance, ‘group holding’ and similar structures.

I4. Definition of an extension to a property

Extension simply means something being physically added onto the property, such as a conservatory, a garage or a porch. Interest paid on a loan which is used to refurbish the property does not qualify for tax relief, such as the installation of double glazing, a new fitted kitchen or a loft conversion where the roofline has not been extended.

I5. acquiring shares in a company holding a trading company

This concession applied for years of assessment up to 2021 and is now included in Article 90AD with effect from 1 January 2022.

Historic tax concessions and practices

I6. acquiring shares in a company holding a commercial let

From 1 January 2022, this concession only applies to interest payable on loans drawn down before 1 January 2022, and will continue to apply up to and including: 

  • the earlier year of assessment 2025 
  • repayment of the loans in question
  • a change in the law

Where an individual or company takes out a loan to buy shares in a property holding company, and that company has as its sole asset land or buildings that are let commercially on open market terms, then tax relief on the interest paid will be allowed to the property holding company, on proof of the facts to the satisfaction of the Comptroller, as a deduction against the rents received by the property holding company.

Monies held on current account, whether interest bearing or not, and held for incidental purposes will be disregarded in determining the assets of the company. The Comptroller will be prepared to allow the property holding company relief for the interest paid on the loan as if it were interest within the provisions of Article 90AB, 90AD, 90AE and 90AF of the Income Tax Law.

​The previous concession number 6 was applied for years of assessment up to 2021.

I7. interest on a former matrimonial home

Where an individual separates from their spouse and the spouse and children remain in the former matrimonial home, interest tax relief will continue to be granted to that individual if they continue to pay interest on a loan to purchase the former matrimonial home, notwithstanding the fact that it is no longer their principal private residence. 

If that individual then purchases another home with a new loan, they will also be granted interest tax relief on the new loan, subject to the restrictions in Article 90AA of the Income Tax Law.

I8. loan from a non-resident to purchase a main residence

If an individual purchases a principal private residence with money loaned to them by a non-resident, interest tax relief will be granted subject to the restrictions in Article 90AA of the Income Tax Law, provided that written confirmation is received from the non-resident that they will:

  • pay Jersey tax on the interest received at the standard rate of 20%
  • pay that tax promptly after receiving the notice of assessment in September each year
  • have no objection to the Comptroller informing the Jersey resident of any failure to meet the terms of the written confirmation for the purpose of withdrawing the interest tax relief concession extended to the Jersey resident

I9. acquiring a minority interest in a company

This concession applied for years of assessment up to 2021 and is now included in Article 90AD with effect from 1 January 2022.

Historic tax concessions and practices

I10. Absence from main residence

In order for a taxpayer to receive tax relief on interest paid on a loan to purchase their main residence they must occupy that residence at the time the interest is paid. Article 90AA(3)(a) of the Income Tax Law states:

Paragraph (2) of this Article shall not apply unless:

  • at the time the interest is paid, the dwelling-house is occupied by the person by whom the interest is payable as their only or main residence

There are occasions when an individual will not occupy their home, they may be on holiday or they may have to vacate the premises whilst extensive repairs are carried out following a fire or a flood. Interest tax relief will continue to be allowed under the provisions of Article 90AA of the Income Tax Law, despite the fact that the individual is not physically present in the house throughout the whole year of assessment. This is providing the Comptroller is satisfied that the property remains his main residence whilst it is not occupied.

Another circumstance where an individual may not be occupying their main residence is where they are seconded outside of the Island to work under a contract of employment abroad. The interest paid on the loan may be allowed under the provisions of Article 90AB of the Income Tax Law if the property is let on a commercial basis. If it is not let or is occupied on a rent free basis, the following may apply.

If the period of the secondment is such that the individual is absent from the Island for at least 1 complete calendar year they may, by concession, be regarded as either resident but not ordinarily resident or non resident during the period of his absence from the Island. In that event tax relief will be allowed on the interest paid under the provisions of Article 90AA of the Income Tax Law for the period 1 January to the date of departure and for the period date of return to 31 December. No tax relief will be allowed on the interest paid whilst the individual is absent from the Island on the ground that they are not occupying their main residence.

I11. Loan to acquire a commercially let property

An individual obtains a loan from a bank or from a person (subject to the conditions below) and advances a similar sum by way of an interest free loan to their company which acquires a property to let on a commercial basis.

If the interest charged on the loan is paid by the company then the interest paid will be allowed as a deduction from the rent received and taxed upon the company. In addition, the interest paid by the company will not represent a 'pecuniary liability' of the director.

The conditions in respect of a loan from a person are that the person making the loan is not connected with: 

  1. the individual
  2. the company to whom the loan is advanced

For the purpose of this concession the definition of a connected person is in accordance with Article 3A of the Income Tax (Jersey) Law 1961.

It is a condition of this concession that full evidence is provided by the individual to the Comptroller on request, to show that the money has been borrowed from the bank and/or non-connected person by him/her personally and was used exclusively to purchase the property which is let on a commercial basis. The Comptroller will be prepared to allow the company relief for the interest paid on the loan as if it were interest within the provisions of Article 90AB, 90AD, 90AE and 90AF of the Income Tax Law.

The previous concession I11 applied for years of assessment up to 2018.

I12. Loan to acquire a let that requires reconstruction

Strictly the interest paid up to the commencement of the letting does not qualify for tax relief because it could not have been paid out of profits or gains of the letting of the property brought into charge to tax. However, the interest paid will be allowed as a deduction against the rents when they first arise under the provisions of Article 90AB of the Income Tax Law. Any part of the interest paid on the loan which is attributable to the demolition of the property will not qualify for tax relief.

I13. loan to acquire an associated company's trading premises

Where:

  1. an individual obtains a loan from a bank and advances a similar sum by way of an interest free loan to their company to acquire trading premises
  2. the trade is conducted from the premises by another associated company
  3. tax relief will be granted against the trading profits of the company conducting the trade providing full evidence is provided by the individual to show that the money has been borrowed from the bank by them personally and was used exclusively to purchase the property from which the trade is being conducted

The claim for tax relief on the interest paid should be made in the tax computation accompanying the accounts of the trading company. The Comptroller will be prepared to allow the trading company relief for the interest paid on the loan as if it were interest within the provisions of Article 90AD, 90AE and 90AF of the Income Tax Law.

I14. Commercial letting for more than 1 property

Where an individual or company has more than one property let on a commercial basis the rents, expenses relating to the properties and the interest paid on the loans to acquire the properties may be aggregated for the purpose of determining the Schedule A assessment. However, if one or more of the properties ceases to be let on a commercial basis, any interest paid on the loans to acquire the property or properties up to the date the letting ceased and any interest paid brought forward may be allowed as a deduction against the aggregate rents received for that year.

Any ‘excess’ interest paid in respect of the property or properties which have ceased to be let on a commercial basis is not available for carry forward ie the interest will not be allowed as a deduction against the rents received from the remaining property or properties in the following year which continue to be let on a commercial basis.

It is important that an individual or company keep adequate records of the rents received, expenses incurred and loan interest paid in respect of each property so that the appropriate calculations and relief can be granted.

I15. Main residence under construction

If an individual acquires a loan to purchase land upon which they construct their main residence, the interest paid on the loan will be eligible for tax relief under Article 90AA of the Income Tax Law. This is notwithstanding that they will not occupy the property until the construction has been completed.

Similarly, tax relief will be extended to an individual who has purchased a dilapidated property as their main residence but is unable to occupy it until such time as it has been refurbished. Any part of the interest paid on the loan which is attributable to the cost of refurbishing the property will not be eligible for tax relief.

I16. Commercial letting for property under construction

If an individual or company acquires a loan to purchase land upon which a property is built to let on a commercial basis, the interest paid on the loan will be eligible for tax relief under Article 90AB of the Income Tax Law. This is notwithstanding that the property will not be let until the construction has been completed. The interest paid on the loan will be allowed as a deduction against the rent when the property commences to be let.

Similarly, tax relief will be extended to an individual or company who has purchased a dilapidated property to let on a commercial basis but is unable to let it until such time as it has been refurbished. Any part of the interest paid on the loan which is attributable to the cost of refurbishing the property will not be eligible for tax relief.

I17. Interest paid, Schedule A deduction

Interest paid on a loan to acquire a property let on a commercial basis will be aggregated with other normal outgoings incurred in respect of the let property. Any deficit, including the interest paid, will be carried forward and set off against rents received in the following years, subject to the restriction outlined in I14 above.

I18. Loan to acquire machinery for a company's trade

Tax relief will be granted against the trading profits of the company conducting the trade providing full evidence is provided by the individual to show that the money has been borrowed from the bank by them personally and was used exclusively to purchase the plant and machinery used in the trade.

The claim for tax relief on the interest paid should be made in the tax computation accompanying the accounts of the trading company.

The Comptroller will be prepared to allow the trading company relief for the interest paid on the loan as if it were interest within the provisions of Article 90AD, 90AE and 90AF of the Income Tax Law.

I19. Interest paid on a loan in another individual's name

Interest paid on a loan in the name of another individual, the named borrower, which is used to acquire or extend their main residence may, by concession, qualify for interest tax relief under the provisions of Article 90AA of the Income Tax Law. Full details of the arrangements concerning the borrowing, repayment of the loan and payment of the interest charged must be disclosed in writing to the Comptroller.

Miscellaneous

M1: Jersey trustees of a trust for non-Jersey residents

1. By virtue of being resident in Jersey, trustees are, in strictness, chargeable to tax in respect of all the income arising to them in that capacity. 

2. However, by concession the taxation of the trustees should reflect the tax position of the beneficiaries of the trust and, where the beneficiaries include legal bodies and arrangements (which for the purposes of this concession includes trusts and partnerships), the ultimate individual beneficial owners of those legal bodies and arrangements. Therefore, the tax treatment of the income arising to the trustees will reflect the tax treatment which would have applied to the beneficiaries (or the ultimate individual beneficial owners of any legal bodies and arrangements which are beneficiaries) if the income had arisen to them directly.  

3. Where either all of the life tenants of a trust or all of the beneficiaries of a trust without life tenants:

  • are non-Jersey resident individuals
  • are legal bodies and arrangements ultimately wholly owned by non-Jersey resident individuals
  • are Jersey charities exempt from income tax under Article 115 of the Income Tax (Jersey) Law 1961

By concession the trustees will not be taxed on any non-Jersey source income and the statutory exemptions outlined in Article 118B will be treated as being available to the trustees.  

In this context "life tenants" means beneficiaries of a trust having a right to trust income as it arises.

4. If trustees are in receipt of income from another trust with Jersey resident trustees or from the activities of a partnership established or incorporated in Jersey, such income will retain the character in which it arose to the underlying trust or partnership. This also applies where there is more than one tier of other trusts and/or partnerships.

5. The statutory exemptions in Article 118B include an exemption from Jersey income tax for:

  • Jersey bank interest
  • any distribution received from a Jersey resident company which is made out of profit/gains taxed at the rate of 0% in the company; and
  • interest paid by a Jersey resident company

6. Where a Jersey resident individual is entitled to income from any part of the trust as it arises, is a beneficiary of a trust without life tenants, or the ultimate beneficial owner of an interest in a legal body or arrangement which is a beneficiary, the concessional exemption granted above will be restricted. 

7. The restriction will operate so as to charge tax on the total income of the trust less any non-Jersey source income or any income falling within the statutory exemptions in Article 118B paid to, or expressly designated or accumulated for the exclusive benefit of, a non-resident individual beneficiary or a beneficiary which is a legal body or arrangement wholly owned by non-resident individuals.

8. In cases in which a Jersey resident individual is a life-tenant, a beneficiary of a trust without life tenants or the ultimate beneficial owner of an interest in a legal body or arrangement which is a beneficiary, the trustees should approach the Comptroller to agree the basis of taxation under this concession. 

9. For the avoidance of doubt, the Comptroller does not need to be approached or notified where none of the beneficiaries/ultimate individual beneficial owners of legal bodies and arrangements which are beneficiaries are Jersey resident. 

10. In the situation where the trustees of a trust are unable to fully identify the residence of all of the beneficiaries/ultimate individual beneficial owners of legal bodies and arrangements which are beneficiaries of the trust but are satisfied, beyond reasonable doubt, that:

  • there are more than ten individuals that are beneficiaries/ultimate beneficial owners of the trust; and
  • more than 90% of the trust income will be ultimately distributable to the beneficiaries who they have verified as non-resident

then the trustees will be taxed under this concession as if all of the beneficiaries/ultimate individual beneficial owners of legal bodies and arrangements which are beneficiaries are non-resident.

11. Where the trustees are not certain beyond reasonable doubt in respect of the criteria set out in paragraph 10 but still believe that full or partial exemption should apply to the income of the trust in accordance with this concession, the trustees should approach the Comptroller on a case-by-case basis setting out the full facts for determination.

12. Where the settlor of a trust is an individual resident in Jersey at the time the trust is created, or when further property is added to the trust, or when any settlor becomes resident in Jersey, the concession will be available, provided that:

  • written application is made accompanied by a copy of the Trust Deed and by an explanation of the purpose of the trust;
  • the trust is irrevocable;
  • the settlor and their spouse/civil partner are irrevocably excluded from benefitting from the trust; and
  • the reduction or avoidance of a Jersey tax liability was not the main purpose, or one of the main purposes, of the creation of the trust

In this context "settlor" means the person who has, or will have, provided any part of the trust property.

13. Where the settlor is a legal body or arrangement and any Jersey resident has any interest in that legal body or arrangement, the trustees should approach the Comptroller on a case-by-case basis setting out the full facts for determination.

14. Income tax returns are not normally issued where there are no Jersey resident beneficiaries / ultimate beneficial owners, however the trustees remain under a legal obligation (under Article 16) to report any income which remains taxable (e.g. Jersey trading income, Jersey rental income) by the normal due dates.

15. This concession also applies to the trustees of unit trusts.  It is acknowledged that in the context of unit trusts where units are held by legal bodies and arrangements, the trustees may not be required under AML or other rules to identify the residence of all of the ultimate beneficial owners.  Correspondingly trustees may not be able to confirm whether they meet the test set out in paragraph 10 above.

16. In the situation where trustees of unit trusts are not obliged to identify and have not identified the residence of all ultimate beneficial owners of a legal body or arrangement under AML or other rules, the units held by that legal body or arrangement will be treated as being held by non-Jersey resident ultimate beneficial owners provided that the legal body or arrangement is either: (a) a company, the shares of which are regularly traded on a stock exchange; or (b) an occupational pension scheme established principally for the benefit of non-residents.

17. This treatment will apply provided:

  • the trustees deduct and account for Jersey income tax in respect of any distributions made directly to any Jersey resident individuals;
  • potential Jersey resident investors are made aware, by means of a warning in the Prospectus, that Article 134A (the general anti-avoidance provision) may be invoked in the case of an investment in an accumulation fund; and
  • the trustees provide details to the Comptroller of any legal body or arrangement that owns units in the unit trust when the trustees become aware that a Jersey resident individual is the ultimate beneficial owner of an interest in that legal body or arrangement.

M2: unilateral relief

Unilateral relief for qualifying companies is now calculated in accordance with Part 14A of the Income Tax Law.

M3: charitable organisations

The profits of charitable and voluntary organisations from fund-raising events such as car boot sales, jumble sales, bazaars, carnivals, gymkhanas and similar activities, together with lotteries or raffles held at such events will not be assessed to tax, even if undertaken on a regular and frequent basis, provided that the following conditions are satisfied:

  • the activities are supported substantially because the public are aware that any profit will be devoted to charity
  • the profits are transferred to charities or otherwise applied for charitable purposes

M5: clubs, societies and associations

Clubs, societies and associations are liable to tax on investment income, such as bank interest, rents and dividends. 

Assessments will not be raised, however, in any year of assessment in which the tax does not exceed £200. 

Profits generated by clubs, societies or associations trading with their own members do not constitute taxable income and any small profits derived from trading with non-members will be ignored for tax purposes.

M6: group life insurance schemes

​This concession applied for years of assessment up to 2020 and is replaced by new Article 70D with effect from 1 January 2021.

M7: money settlements

Money settlements are only applicable to declarations made up to 31 December 2019. 

Penalties charged on unpaid tax brought to light either through an investigation into a taxpayer's affairs or through a disclosure by the taxpayer of previously undeclared income are calculated by reference to the following criteria:

  • the readiness with which irregularities are disclosed; this can range from a spontaneous voluntary disclosure to repeated denials of any wrong doing
  • the co-operation afforded by the taxpayer throughout the investigation to help bring it to a conclusion
  • the size and gravity of the offence, ie the amount of omitted income and the degree of culpability associated with the offence, which may range from negligence to fraud

Any 'interest' included in the settlement is broadly calculated by reference to the length of time that the tax has remained unpaid.

M8: dividends from non-resident companies' capital profits

Refer to Article 80(3A) and Schedule 5 (paragraph 13) of the Income Tax Law for the treatment of these dividends.

Income Tax (Jersey) Law 1961 and amendments

Historic tax concessions and practices

Charitable foundations

The Income Tax Law does not specifically provide for charitable Foundations to be granted exemption from income tax. However, by concession, exemption will be granted under Article 115(a) provided the foundation:

  • is set up solely for charitable purposes as defined in Art 115(a)(i)
  • submits a copy of its charter
  • submits a copy of its regulations
  • submits a copy of its accounts on an annual basis

The tax rules governing charities changed from 1 January 2019 when the final elements of the Charities (Jersey) Law 2014 came into force. This included the tax treatment of charitable foundations.

Jersey trustees of a trust for non-Jersey residents

By virtue of being resident in Jersey, trustees are, in strictness, chargeable to tax in respect of all the income arising to them in that capacity.

However, by concession the taxation of the trustees should reflect the tax position of those beneficiaries of the trust and, where the beneficiaries include legal bodies, the ultimate individual beneficial owners of those legal bodies. Therefore, the tax treatment of the income arising to the trustees will reflect the tax treatment which would have applied to the beneficiaries (or the ultimate individual beneficial owners of any legal bodies which are beneficiaries) if the income had arisen to them directly.

Where either all of the life tenants of a trust or all of the beneficiaries of a discretionary trust:

  • are non-Jersey resident individuals
  • are legal bodies ultimately wholly owned by non-resident individuals
  • are Jersey charities exempt from income tax under Article 115

by concession the trustees will not be taxed on any non-Jersey source income and the statutory exemptions outlined in Art 118B of the Income Tax (Jersey) Law 1961 will be treated as being available to the trustees.

In this context "life tenants" means beneficiaries of a trust having a right to trust income as it arises.

The statutory exemptions in Article 118B include an exemption from Jersey income tax for:

  1. Jersey bank interest
  2. any distribution received from a Jersey resident company which is made out of profit/gains taxed at the rate of 0% in the company and
  3. interest paid by a Jersey resident company

Where a Jersey resident individual is entitled to income from any part of the trust as it arises, is a beneficiary of a discretionary trust, or the ultimate beneficial owner of an interest in a legal body which is a beneficiary, the concessional exemption granted above will be restricted.

The restriction will operate so as to charge tax on the total income of the trust less any non Jersey source income or any income falling within the statutory exemptions in Article 118B paid to, or expressly designated or accumulated for the exclusive benefit of, a non resident individual beneficiary or a beneficiary which is a legal body wholly owned by non resident individuals.

In cases in which a Jersey resident individual is a life tenant, a beneficiary of a discretionary trust or the ultimate beneficial owner of an interest in a legal body which is a beneficiary, the trustees should approach the Comptroller to agree the basis of taxation under this concession.

For the avoidance of doubt, the Comptroller does not need to be approached or notified where none of the beneficiaries or the ultimate individual beneficial owners of legal bodies which are beneficiaries are Jersey resident.

In the situation where the trustees of a trust are unable to fully identify the residence of all of the beneficiaries or the ultimate individual beneficial owners of legal bodies which are beneficiaries of the trust but are satisfied, beyond reasonable doubt, that:

  1. there are more than ten individuals that are beneficiaries/ultimate beneficiaries of the trust; and
  2. in accordance with the terms of the trust more than 90% of the trust income will be ultimately distributable to the beneficiaries, who they have verified as non-resident

Then the trustees will be taxed under this concession as if all of the beneficiaries or ultimate individual beneficial owners of legal bodies which are beneficiaries are non resident.

Where the trustees are not certain beyond reasonable doubt in respect of the criteria set out at 1 and 2 above but still believe that full or partial exemption should apply to the income of the trust in accordance with this concession, the trustees should approach the Comptroller on a case by case basis setting out the full facts for determination.

Where the settlor of a trust is an individual resident in Jersey at the time the trust is created, or when further property is added to the trust, or when any settlor becomes resident in Jersey, the concession will be available, provided that:

  • written application is made accompanied by a copy of the Trust Deed and by an explanation of the purpose of the trust
  • the trust is irrevocable
  • the settlor and their spouse / civil partner are irrevocably excluded from benefitting from the trust
  • the reduction or avoidance of a Jersey tax liability was not the main purpose, or one of the main purposes, of the creation of the trust

In this context "settlor" means the person who has, or will have, provided any part of the trust property.

Where the settlor is a legal body and any Jersey resident has any interest in that legal body, the trustees should approach the Comptroller on a case by case basis setting out the full facts for determination.

There are two further points:

  1. income tax returns are not normally issued where there are no Jersey resident beneficiaries/ultimate beneficial owners, however the trustees remain under a legal obligation (under Art 16) to report any income which remains taxable (such as Jersey trading income, Jersey rental income, and so on) by the normal due dates.
  2. the generality of the foregoing applies equally to the trustees of unit trusts. In addition, full exemption will not be lost by the existence of Jersey resident beneficiaries or the ultimate beneficial owners provided that:
    • the trustees undertake to deduct and account for Jersey income tax in respect of any distributions made directly to any Jersey resident individuals
    • potential Jersey resident investors are made aware, by means of a warning in the Prospectus, that Article 134A (the general anti-avoidance provision) may be invoked in the case of an investment in an accumulation fund
    • the trustees agree to provide details to the Comptroller of any legal body that owns units in the trust where the trustees are aware that a Jersey resident individual is the ultimate beneficial owner of an interest in that legal body

This concession has been updated and the revised version can be found under M1 by following the link below.

Miscellaneous concession and practice

Settlements with Jersey trustees and non-resident beneficiaries

By virtue of being resident here, these trustees are, in strictness, chargeable to tax in respect of all income arising to them in that capacity.

However, by concession, they are, in certain circumstances, granted exemption from that liability. Broadly speaking the aim of this exemption is to free from tax income arising for the benefit of non-residents which is foreign income or Jersey bank interest.

Full exemption from tax on foreign income is given in the following circumstances:

  • where the life tenants of a settlement are all non-resident
  • where the named beneficiaries of a discretionary settlement are all non-resident

Partial exemption from tax on foreign income is given in the following circumstances:

  • where one or more of the life tenants of a settlement are resident in Jersey
  • where one ore more of the named beneficiaries of a discretionary settlement are resident in Jersey and separate funds are set up within the settlement from which the Jersey residents are wholly and irrevocably excluded

In these two circumstances the charge to tax is based on the total income less the foreign income belonging to, or accumulated for, the non-residents.

It should be noted that the inclusion of a Jersey resident as a potential beneficiary even simply as an ultimate long stop in the event of all other failing (sometimes known as a default beneficiary) will destroy the full and partial exemption given in respect of discretionary settlements unless the Jersey resident beneficiary is a charity exempt from tax by virtue of Article 115(a).

The Comptroller needs to be notified of cases where only partial exemption is due. The required information is as follows:

  • the name of the settlement and the names of the trustees
  • the date it was created
  • the names and addresses of the Jersey resident beneficiaries and the extent of their interest

Otherwise, exemption is granted without the need for formal application unless the settlor is resident in Jersey. In that event exemption will be given provided that:

  • written application is made accompanies by a copy of the trust deed and by an explanation of the purpose of the settlement
  • the settlement is irrevocable
  • the settlor and spouse are irrevocably excluded from benefiting
  • the reduction or avoidance of a Jersey tax liability was not the main purpose, or one of the main purposes, of the creation of the settlement

In this context 'settlor' means the person who has, or will have, provided the trust property.

There are three final points:

  1. Reporting: income tax return forms are not normally issued where full exemption applies but the trustees are under a legal obligation (by virtue of article 16) to report the existence of Jersey income, other than bank interest.
  2. Interest payments: where full exemption applies, interest paid by trustees is deemed to be outside the charging provisions or article 87.
  3. Unit trusts: the generality of all the foregoing applies equally to the trustees of unit trusts. In addition full exemption from tax on foreign income is not destroyed by the existence of Jersey resident beneficiaries (unit holders) provided that:
    • formal application for exemption is made
    • the trustees undertake to deduct and account for income tax in respect of any distributions to Jersey residents
    • potential investors resident in Jersey are made aware, by means of a warning in the prospectus, that article 134A (the anti-avoidance provision of the income tax law) may be invoked in the case of an investment in an accumulation fund

This concession was replaced on the 3 September 2013 by a new concession, 'Jersey trustees of a trust for the benefit of non-Jersey residents'. The new concession, M1, can be found by following the link below.

Miscellaneous concessions and practice

Annuity contracts for overseas residents 

Article 131C permits the approval of retirement annuity contracts for individuals who are resident outside Jersey.

In addition to the conditions contained in that article:

  1. the contract is not to be offered to residents of Guernsey; and
  2. the contract must be effected through a local financial intermediary

The purpose of condition 2 is to ensure that there is some economic benefit to the Island from this business.

The relevant parts of this concession have now been included in the pension scheme administrator guidance notes.

Pension administrator tax guidance notes

Annuity contracts - the meaning of "agency"

Among those who may obtain approval of annuity contracts under Article 131B are insurance companies, banks and other financial institutions carrying on business in Jersey or in Guernsey through a branch or agency.

The word "agency" is not defined. In general, an overseas company that otherwise qualifies will not be prohibited from obtaining approval of an annuity contract provided that it has, for example, a subsidiary or associated company operating in Jersey.

In the case of an insurance company the "agency" must ensure that, as and when required, tax is deducted from the payment of an annuity and accounted for to the Comptroller.

The definition of "agency" is now included in the pension scheme administrator guidance notes.

Pension administrator tax guidance notes

Self administered retirement annuity contracts

The income of the annuity fund of a resident company carrying on the business of granting annuities on human life is exempt from Jersey income tax by virtue of Article 115(fa). This has opened the way for an individual to set up his own annuity company. The annuity contract he enters into with that company requires approval under Article 131B and must therefore comply with that Article. The further conditions laid down are as follows:

  1. the person having control of the annuity fund must not borrow funds on its behalf and funds may not be loaned to the individual or to any person connected with the individual.
  2. investment transactions between the individual (or any person connected with him) and the annuity fund are prohibited.
  3. assets of the fund are not to be used for the personal benefit or enjoyment of the individual.
  4. the fund must not invest in a purchased life annuity.
  5. the annuity company is not permitted to pay an annuity. At retirement date the annuity fund, net of any permissible lump-sum, is to be applied in the purchase of an annuity from the Jersey or Guernsey office of an overseas company carrying on the business of granting annuities on human lives.
  6. accounts of the company, incorporating the annuity fund, must be made up to 31 December each year, The annual claim to exemption from Jersey tax under Article 115(fa) is to be made promptly after the year-end and is to be accompanied by the accounts of the company.

​This concession has been withdrawn. Rules governing self administered retirement annuity contracts are now laid out in tax information for pension scheme administrators. 

Full commutation of trivial annuity contracts 

If at the time a personal pension comes into payment the value of the fund is insufficient to produce an annual pension of £520, before the commutation allowed by Article 131B(3)(c), consideration will be given to allowing payment of the full value of the fund as a tax-free lump sum.

This concession will be withheld where the policyholder:

  • has any other similar policy (unless the value of all policies, as a total, is trivial)
  • is a member of an occupational pension scheme (either active or with retained benefits)
  • has had a similar request granted previously
  • there is evidence to suggest that the contract was made with a view to being commuted

In certain circumstances, full commutation will be conditional upon payment to the Comptroller of Revenue of part of the proceeds, eg where the policy holder has emigrated from Jersey leaving tax debts.

​This concession has been replaced by legislation. Information about commuting pensions can be found on the Jersey pension scheme guide.

Transferring pension rights between Jersey and Guernsey

By reciprocal agreement between Jersey and the UK arrangements have been made to facilitate the transfer of pension rights where an individual moves from Jersey to the UK and vice versa. There is no formal arrangement between Jersey and Guernsey to facilitate the transfer of pension rights where an individual moves from Jersey to Guernsey and vice versa. In practice, however, transfer payments to or from approved annuity contracts or pension schemes in both jurisdictions can be made in these circumstances.

The reciprocal arrangement between the UK and Jersey terminated on 5 April 2006. Jersey residents who move their permanent residence to the UK following a change of employment will still be able to transfer their pension rights as before. However this will be under a published HMRC concession rather than under the reciprocal arrangement.

Transfers to and from approved pension schemes (including Guernsey) is now dealt with in the practice notes for pension scheme administrators.

Group relief

The Income Tax Law contains no provisions for the allowance of a trading loss incurred by a company against the trading profits of another company in the same group. It is open to company advisers to discuss with the Comptroller of Revenue what might be done to mitigate the situation by way of reasonable “management fees” charged against the profits of the profitable company in favour of the loss making company.

"Group" in this context means parent and subsidiary companies, or a number of companies in common ownership, all residents in Jersey for tax purposes.

This concession does not apply to companies incorporated on or after 3 June 2008 and all companies from the year of assessment 2009. Legislation is now in effect, Articles 123EA and 123F of the Income Tax (Jersey) Law. 

Where accounts, including a balance sheet, are supplied which are made up annually to the same date, computations on the basis of the accounts year ended within the year of assessment will be accepted, subject to the condition that assessments for the year in which income first arises, and the year of cessation, must be computed on the statutory basis. In the event of the first accounts covering a period of less than 1 year, the assessment for the second year must also be computed on the statutory basis.

A change from the accounts basis to the statutory basis will be allowed but a subsequent change to the accounts basis will be refused.

This concession no longer applies from the year of assessment 2009, but the basis of assessment of the rents may remain 'grandfathered' for those companies who historically benefited from the concession.​

Rents arising to traders

Where a trader received rent from a property owned or leased by him which does not form part of the property used by him or the purposes of his trade, the rent received and all expenses relating to the property must be eliminated from the computation of trading profits. However, if there has been a long-standing practice to include the rent and expenses in the computation, that practice will be allowed to continue.

This concession does not apply from the year of assessment 2009, but the basis of assessment of the rents may remain 'grandfathered' for those companies who historically included Jersey rents and expenses in the computation of the Schedule D Case 1 profits.

Accounts basis for investment holding companies

An investment holding company is assessable under Schedules A and D on the basis of the income less management expenses of the year of assessment. Apart from the year in which income first arises and for the year of cessation, when the assessments must be computed on the statutory basis, assessments for other years may be made by reference to the income and expenses of the accounting year ended in the year of assessment. In the event of the first accounts covering a period of less than one year, the assessment for the second year must also be computed on the statutory basis.

This concession does not apply from the year of assessment 2009, but the basis of assessment of the rents may remain 'grandfathered' for those companies who historically included Jersey rents and expenses in the computation of the investment income assessed under Schedule D Cases III to VI. 

Loan to acquire a commercially let property

An individual obtains a loan from a bank and advances a similar sum by way of an interest free loan to their company which acquires a property to let on a commercial basis. If the interest charged on the bank loan is paid by the company then the interest paid will be allowed as a deduction from the rent received and taxed upon the company. In addition the interest paid by the company will not represent a 'pecuniary liability' of the director.

It is a condition of both of these concessions that full evidence is provided by the individual to show that the money has been borrowed from the bank by him personally and was used exclusively to purchase the property which is let on a commercial basis. The Comptroller will be prepared to allow the company relief for the interest paid on the loan as if it were interest within the provisions of Article 90AB, 90AD, 90AE and 90AF of the Income Tax Law.

This concession applied for years of assessment up to 2018 and is replaced by new concession I11.

Group life insurance schemes

A group life insurance scheme is not a scheme to which Article 131 of the Income Tax Law applies because it is not a superannuation fund or pension scheme. Therefore no approval can be given to the group life insurance scheme under that article.

However if the death benefits payable under such a scheme do not exceed the limits laid down for approval under Article 131 of the Income Tax Law then the Comptroller may deem the scheme to be 'satisfactory for income tax purposes'.

The premiums paid by the employer, or the company, may be eligible for income tax relief as an expense of the business if it can be shown that they were incurred wholly and exclusively for that purpose.

Under the benefit in kind exemption provisions the directors and employees are exempt from income tax on the premiums paid by the employer, or the company, into the scheme.

This concession applied for years of assessment up to 2020 and is replaced by Article 70D with effect from 1 January 2021.

Foreign tax on trading profits

Where a trader carries on a trade outside of Jersey and the profits of that trade bear the tax of that foreign country, the tax borne will be allowed as an expense although it is not strictly an expense incurred in earning the profits of the trade.

Foreign tax for the purpose of this paragraph does not include any tax paid in a country which has a double taxation arrangement with Jersey which includes specific provisions regarding relief for tax suffered on trading profits as, in these cases, relief should be determined in accordance with those provisions.

This concession applied for years of assessment up to 2020 and is replaced by Article 70C with effect from 1 January 2021.

Transfer of machinery to successor

Where all machinery or plant is transferred by a trader to his successor, the capital allowances will be calculated as if the trade had continued, provided that both parties agree.

This concession applied for years of assessment up to 2020 and is replaced by Article 106AB with effect from 1 January 2021.

Capital allowances, commencement of trade

If the first financial period of the trade ends within the year of assessment in which it is started up (the first year), the trade will be assessed for that year on the profits or gains of that first financial period.

Capital allowances may be claimed on plant and machinery purchased and used in the trade in that first financial period subject to appropriate time apportionment.

This concession applied for years of assessment up to 2020 and is replaced by paragraph (2A) of Article 106A with effect from 1 January 2021.

Enhancement of Article 107/107A loss

The amount of capital allowances due to a trader for the year of assessment for which Article 107 or 107A relief is claimed, so far as they have not been allowed against the assessment for that year, may be added to the loss or may be used to create a loss for Article 107 or 107A relief purposes, if so claimed by the trader.

The concession applies only to capital allowances of the year of loss and does not extend to allowances which may have been carried forward from earlier years.

This concession does not apply to a company incorporated on or after 3 June 2008 and all companies (other than utility companies taxed at 20%) from the year of assessment 2009.

This concession applied for years of assessment up to 2020 and is replaced by Article 110B with effect from 1 January 2021.

Voluntarily increasing your ITIS rate

Article 41C paragraph 8 states 'subject to paragraph 9 an employee may, at any time, make an election, in writing, to the Comptroller to have a rate applied...that exceeds the rate determined...'

Notwithstanding this, we will also accept an election to voluntarily increase an ITIS effective rate by telephone in excess of the prescribed limits.

We will still issue the notice in writing to the employee.

This concession applied for years of assessment up to 2020 and is replaced by Article 41CB with effect from 1 January 2021.

Child care relief for new residents

Qualifying child care payments made from date of arrival in Jersey may be allowed in full. However, the overriding cap of £6,273 will be time apportioned and the relief correspondingly reduced to that figure if it is lower than the qualifying payments made since the date of arrival.

This concession applied for years of assessment up to 2021 and is replaced by Article 129AA with effect from 1 January 2022.

Interest tax relief for new residents

Qualifying interest payments made under Article 90AA of the Income Tax Law (marginal income deduction in respect of interest payments) on main residence only made from the date of arrival may be allowed in full.

This concession applied for years of assessment up to 2021 and is replaced by Article 129AA with effect from 1 January 2022.

Child allowance for new residents

Where a born is born either before the date of arrival in Jersey or after the date of departure from Jersey the child allowance is apportionment under Article 129A (apportionment for individual in Jersey for part of the year) of the Income Tax Law.

This concession applied for years of assessment up to 2021 and is replaced by Article 129AA with effect from 1 January 2022.

New residents

Where an individual becomes chargeable as resident and ordinarily resident in Jersey, either for the first time or after being treated as non-resident for the previous year of assessment, they are normally regarded as resident and ordinarily resident from a certain date. Assessments on overseas income under cases IV and V will be computed as follows if:

  1. the source of income ceased before that date of commencement of residence no assessment will be raised.
  2. the income first arose before the date of residence, the assessment for the first year of residence will be restricted to the proportion appropriate to the period from the date of commencement of residence to the end of the tax year.
  3. the income first arose after the date of commencement of residence, the full amount of the income arising in the first year will be assessed.
  4. the source of income ceased between the date of commencement of residence and the end of the first tax year, the assessment will be restricted to the amount of income arising for the period of the date of arrival to the date of cessation of the source.

In the case of an individual becoming resident but nor ordinarily resident, they will be treated as resident for the whole of the income tax year and assessments under case iv and v will be computed on the remittances in that year whether made before, during or after their physical presence in Jersey in that year.

This concession applied for years of assessment up to 2021 and is replaced by Article 80A with effect from 1 January 2022.

Individual leaving Jersey permanently

Where an individual leaves Jersey to take up permanent residence abroad, their assessment on income arising overseas for the year in which residence ceases will be based on the actual income arising in the period 1 January to the date of departure.

This concession applied for years of assessment up to 2021 and is replaced by Article 80A with effect from 1 January 2022.

Acquiring shares in a company holding a trading company

Where a person takes out a loan to buy shares in an investment holding company and that company has as its sole asset 100% of the shares of a trading company or companies and the person is actively engaged in the trade carried on by the trading company or trading companies, the Comptroller will be prepared to allow the person relief for the interest paid on that loan as if it were interest within the provisions of Article 90AD, 90AE and 90AF of the Income Tax Law.

This concession applied for years of assessment up to 2021 and is replaced by Article 90AD with effect from 1 January 2022.

Acquiring shares in a company holding a commercial let

Where an individual or company takes out a loan to buy shares in a property holding company, and that company has as its sole asset land or buildings that are let commercially on open market terms then tax relief on the interest paid will be allowed to the property holding company, on proof of the facts to the satisfaction of the Comptroller, as a deduction against the rents received by the property holding company.

Monies held on current account, whether interest bearing or not, and held for incidental purposes will be disregarded in determining the assets of the company. The Comptroller will be prepared to allow the property holding company relief for the interest paid on the loan as if it were interest within the provisions of Article 90AB, 90AD, 90AE and 90AF of the Income Tax Law.

This concession applied for years of assessment up to 2021 and is replaced by the new concession I6.

Acquiring a minority interest in a company

When an individual obtains a loan to acquire an initial interest in a company, even though not a controlling interest, but is at least 10% of the issued share capital, and where that individual is actively engaged and working in the trade carried on by that company, and also, where an individual obtains a loan to acquire an initial interest in a company, even though not a controlling interest, but is at least 10% of the issued share capital, and where that individual actively uses the expertise of that company in which he has acquired a minority interest wholly and exclusively for the purposes of generating the profits of his own trade, interest tax relief will be allowed.

In addition, trading companies obtaining loans to take an initial minority interest in other trading companies wholly and exclusively for the purposes of generating profits and its trading operations will also be given interest tax relief.

In cases where less than 10% of the issued share capital is purchased, the Comptroller may nevertheless give the interest tax relief if full disclosure of the facts of the case are made to him. The Comptroller will be prepared to allow the individual or trading company relief for the interest paid on that loan as if it were interest within the provisions of Article 90AD, 90AE and 90AF of the Income Tax Law.

This concession applied for years of assessment up to 2021 and is replaced by Article 90AD with effect from 1 January 2022.

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