The States Assembly agreed the first law changes on 15 September 2021 and the first group of Islanders were moved to Independent Taxation on 1 January 2022.
When you move to Independent Taxation, you will be responsible for filing your own return and paying your own bill throughout your life, whether you are single, co-habiting, in a civil partnership or married.
During October and November 2021 events gave Islanders the opportunity to hear about the changes in more detail and ask our tax experts questions. These are the slides that were presented:
Recording of public briefing event on Facebook
Use our tax calculator to find out how tax allowances work and to get an Independent Taxation illustration.
The benefits of Independent Taxation
The move to Independent Taxation means that tax law will reflect the equality and fairness we expect from our relationships, families and community.
It will mean both partners in a marriage or civil partnership will be treated the same way.
Under the proposals, it's expected that by 2025, all Islanders will be taxed independently.
Independent Taxation Portuguese leaflet
Independent Taxation Polish leaflet
3 steps to change
Step 1: Independent taxation introduced
From 2022, all single people and all new arrivals to the Island, including if you're married or in a civil partnership, will be independently taxed. If you marry or become a civil partner after 31 December 2021, you'll be independently taxed.
Step 2: Optional change
In 2022 and 2023, married couples and civil partners will be offered the option to move to Independent Taxation for 2023 and 2024.
Step 3: Compulsory change
By 2025, if the legislation is passed, all remaining couples will move, and if your tax bill is higher under Independent Taxation, you can claim a compensatory allowance.
If you're single
You'll continue to be taxed as you are now. Nothing will change for you.
If you get married or enter into a civil partnership in the future, you'll be taxed independently.
If you co-habit
You'll continue to be taxed as two single people if you live with your partner but are not married or in a civil partnership. Nothing will change for you.
If you get married or enter a civil partnership in the future, you'll be independently taxed.
If you're married or in a civil partnership
Around 9 out of 10 taxpayers receive allowances when their tax is calculated, which reduces the tax they pay. Independent Taxation changes the allowances given to people who are married or in civil partnerships.
You can choose to move to Independent Taxation from 2023 or 2024, or wait to be moved automatically when it's compulsory, which is currently proposed to happen by 2025.
One of the factors driving your decision to move to Independent Taxation before it's compulsory, will be how much tax you will pay.
You may pay the same, or less tax when you are independently taxed, or you may pay more in 2023 or in any year until the compensatory allowance is available.
Once you elect to be independently taxed, you can't go back to the current tax system, so it's important you understand how tax works and how the allowances will change.
You should explore how your tax may be affected before you decide. The information about changes to tax allowances and our tax calculator can help with this.
How current married and civil partner allowances will change
Current allowances (examples based on 2022 allowances)
Married couples or civil partners are allowed £26,550 of income before paying tax. If both partners work, they receive an additional second earner's allowance of up to £6,550. This means the couple can have income up to £33,100 before they pay any tax.
Independent Taxation allowances
Each spouse or partner will be allowed £16,550 of income before paying tax. That adds up to the same £33,100 they are allowed under the current rules.
|Tax allowance||£29,750||Your tax allowance||£18,550|
|Second earner's allowance||£7,350||Spouse or partner's tax allowance||£18,550|
If your income is under £18,550
If you're married or in a civil partnership where one of you has income less than £18,550 per year and the other partner's income is more, your two Independent Tax bills added together may be more than you pay with the current allowances. You'll be able to claim the compensatory allowance when Independent Taxation is made compulsory.
The Treasury Minister is proposing a new allowance to make sure you and your partner aren't worse off by the change. The new allowance would become available to marginal rate taxpayers when Independent Taxation is planned to become compulsory, by 2025.
For the next 10 years, you would pay no more tax on your income than if you'd remained in the current tax system.
Before the end of the 10 years, the allowance will be reviewed.
It's proposed that you will be able to claim the allowance if your tax is more under Independent Taxation, than it would have been under married or civil partnership tax rules. This will happen where one spouse or partner has income below the basic tax allowance.
If this happens the compensatory allowance will reduce the tax to the amount being paid using the married or civil partnership tax allowance.
Examples based on 2022 allowances
How the compensatory allowance is claimed
To claim the allowance, you'll be asked to include your spouse or civil partner's total earned and unearned income on your return. If you are eligible for the allowance it will be calculated and applied to your tax.
The compensatory allowance will be available from the year that Independent Taxation is mandatory and you will be able to claim it for any year that it is available.
Electing for Independent Taxation
My spouse doesn't want to be independently taxed
The first phase is an optional election. Both spouses or partner's have to agree.
We have the tax calculator available so you can see how you might be affected financially. If, after you have explored this, either of you don't agree to be independently taxed then you will have to wait for it to become mandatory.
The amount of tax you'll pay
You may pay the same, less or more combined tax. One spouse or civil partner may pay more, the other less.
It is your choice to elect to be independently taxed from 2023 or 2024 and if your tax bill is higher after you have moved you'll have to pay the additional tax.
You should make sure you understand all the information about Independent Taxation and use the tax calculator. You can also seek advice from a qualified tax adviser or tax agent and Jersey Citizens Advice is available in certain circumstances.
It's proposed that a compensatory allowance will be available when Independent Taxation becomes mandatory, to ensure that you won't pay more tax than if you were still taxed under married taxation for at least 10 years.
If you're worried or unsure if you'll pay more tax you should seek advice, or wait until Independent Taxation becomes mandatory.
Electing for Independent Taxation
Elections to be independently taxed from 2024 are now open. You have until 31 July 2023 to elect.
Election for Independent Taxation
What to expect when you move
If you elected for Independent Taxation from 2024 and you're employed, your first ITIS rate under Independent Taxation will apply from January 2024.
You'll get your first tax return to complete under Independent Taxation for 2024 in January 2025.
Tax filing help
If you've not completed a tax return before or it's been a while since you last completed one, help is available to register for online filing and there are guides to help you complete a paper return.
File your personal tax return
Declaring your income
Any income that you have personally, like your salary or pension income, you'll declare on your own tax return.
If you're self-employed and the business is jointly owned with your spouse or civil partner you would each declare your half of the income and claim your half of the expenses.
If you have investment income, for example savings or property income, if it's in just your name you would declare it on your return. If it's owned in joint names then you would both declare your own share of the income.
You will claim expenses that you pay personally, like work expenses or contributions into a pension scheme on your own tax return.
Any mortgage interest relief claim should be made by the person who pays the mortgage.
Any child care tax relief claim should be made by the person who pays for the child care.
If you share payment of these costs, you should record on your own tax return only the portion of the costs that you pay.
Any available child allowance will be shared between you equally unless you tell us otherwise. You may request to share this allowance in a more tax efficient way, for example if your income is below the basic tax allowance and your spouse or partner earns more.
In most circumstances if you're married or in a civil partnership you are not able to claim additional allowance for children. However, if you support your children and your spouse or civil partner is incapacitated for the whole year due to illness, you can claim the allowance.
Getting my spouse or partner to complete the return
The tax return is your own legal responsibility. If you choose to let someone else assist you or they complete it on your behalf, you still have to sign the return making the declaration that it is true, complete and correct.
If you submit incorrect information, you'll be liable for any fines or penalties so you must take the time to check the information.
As with your income tax, your long-term care contribution will also be calculated independently.
Paying your own tax
Income Tax Instalment Scheme (ITIS)
You will receive your own ITIS rate if you're employed. It will be calculated based on, and pay towards, your individual tax bill. Individual ITIS rates may change significantly depending on the amount of your income.
Payment on account
If you are liable to pay tax but have little or no employment income, you'll will be asked to make two payments on account in November and the following May.
If you want to spread these payments over the year you can set up a direct debit.
Direct debits are normally reviewed annually according to changes in your tax bill.
If you have a direct debit that covers all your joint tax or your part of the joint tax, you may want to review the amount when you are independently taxed.
You may need to set up a new direct debit on your own account to pay your own tax.
Direct debit information
When you pay with a card online or send a payment using online banking, make sure you quote your own individual tax identification number (TIN).
Pay your personal or company tax
Repayments of tax
Any overpayments made before you're independently taxed will go to the primary taxpayer unless we are instructed otherwise.
Under Independent Taxation any repayments will go to you.
Paying off old tax
Paying the tax on income in any year before you move to Independent Taxation, will always remain the responsibility of the primary taxpayer in the marriage or civil partnership. This will still be the case even after you move to Independent Taxation.
Most couples decide together how they pay any arrears, in the same way they deal with other common liabilities that are legally in one partner's name.
Any previous payment agreements would remain in force.
Problems paying your personal tax
Prior year basis 'PYB' tax
The 2019 frozen tax is the responsibility of the primary taxpayer in the marriage or civil partnership. This stays the case even after you move to Independent Taxation.
Most couples will decide together which option they choose to pay the liability, in the same way they deal with other common liabilities that are legally in one partner's name.
Prior year basis tax reform
Getting married or separating
You'll still need to let us know if you get married or permanently separate from your spouse or civil partner.
If you separate you will be taxed as a single person.
Tell Revenue Jersey you're married or in a civil partnership
Wife's social security pension paid from husband's contributions
Due to the way second earner's allowance works this is currently taxed as part of your husband's income.
This will change under Independent Taxation and you will declare this income on your own return. The requirement to declare this income as your husbands disappears with Independent Taxation as there will no longer be any second earner's allowance.
You will each have your own tax return and allowances.
You can use our tax calculator to see how this may affect you:
- Enter your income as you would normally declare it on your tax return with the pension paid from your husband's contributions included in his pension income.
- Note the amount of tax and long-term care.
- Remove the pension paid from your husband's contributions from your husband's pension income and enter it as spouse's pension income.
- Click on the show independent tax button and note the combined tax under Independent Taxation.
- Compare the result in 2 to the result in 4.
If you don't want to be independently taxed but want your own tax return and your own tax to pay, you can still elect for separate assessments until Independent Taxation becomes mandatory.
Separate assessment is not the same as Independent Taxation as it still treats you as a married couple or civil partnership with the same allowances, but you pay your share of the joint tax bill.
Information about separate assessments
When you're independently taxed, there are additional requirements if you run a business with your spouse or civil partner under a
A business partnership must complete a partnership return and comply with new economic substance rules.
If you already have a partnership agreement in place between you and your spouse or civil partner, you should get advice from a qualified tax professional before you move to Independent Taxation in the voluntary phase.
High value residents
Independent Taxation applies to all married couples and civil partners in Jersey, including high value residents (HVRs). New HVR's arriving in Jersey from 2022 onwards will be subject to Independent Taxation rules. Any HVR couples who separate from 2022 would also fall into the new Independent Taxation regime.
Independent taxation also applies to non-resident married couples and civil partners. This means that non-resident independently taxed spouses and civil partners are not able to utilise the married couples exemption threshold if applying for non-resident relief from the year of assessment 2022.
Independently taxed spouses and civil partners who both receive Jersey income, for example from a jointly owned property, must each file their own return.
Non-resident tax relief
Spouse or civil partner's permission
If you currently have permission to discuss your spouse's or partner's tax (the primary taxpayer), this will be automatically cancelled once you move to Independent Taxation.
Joint access to information from 2021
The law was changed from the year of assessment 2021, so that information can be provided to both spouses or civil partner's while they are being taxed under married or civil partnership tax law. This will not apply when you move to Independent Taxation.
Tax agents' authority
When you are independently taxed, you will make all the choices about how you manage your own tax affairs.
You may wish to appoint a qualified tax professional (tax agent) to deal with your tax affairs, especially if you have more complex tax circumstances.
If you currently have a tax agent looking after your tax as a couple, the current 'all communications' authority will continue to apply to the
primary taxpayer only.
There is no obligation to have a tax agent because your spouse or partner does, or to appoint the same tax agent.
If you decide to have a tax agent to deal with your tax when you are independently taxed, they will ask you to sign an 'all communications' authority.
Any existing agent authorities will only cover the tax of the person who signed the original authorisation form.
This will allow the tax agent to communicate directly with us about your tax affairs.
Independent tax consultations
A number of consultations have taken place to inform reform decisions that have led to Independent Taxation as the most appropriate way to modernise personal tax.
The consultation with 5,000 Islanders shortlisted 3 options for reform.
The results of all consultations before 2021 are summarised in this report.
Personal tax reforms
Impact on revenue
We have forecast that the Government of Jersey will lose around £4 million of tax income as a result of introducing Independent Taxation.
This relates to tax that that comes from married couples and civil partnerships currently taxed at the standard rate, where one spouse or partner has a comparatively smaller amount of income than the other spouse or partner.
When they are independently taxed the spouse or partner with the lower income will benefit from marginal relief.
This reflects the fundamental principle of Independent Taxation, which is to treat each person according to the same rules, regardless of relationship status, age or gender and looking at each person's income on its own.