With the latest Budget recently released, we have asked our tax specialist Chantelle Le Tissier to provide us with an overview of the important changes. Please note that changes come into effect on the 1st January 2019.
Personal allowances to increase by £500 to £11,000 for a single person. Age related allowance is frozen so will still be £11,450.
Extension of the gradual withdrawal of personal allowances (including mortgage interest relief and pension contributions) if an individual’s income exceeds £100,000 and decelerating the withdrawal ratio to a rate of 1:5 to alleviate the impact on marginal tax rates. So, for every £5 that the individual’s salary exceeds £100,000 the personal allowance will be withdrawn by £1. For 2018 the limit is £142,896 and the withdrawal rate £1 for every £3 above the limit.
The tax cap for wealthy individuals is increasing on non-Guernsey source income from £110,000 to £130,000 and for Guernsey source income from £220,000 to £260,000 in order to retain the real value of these caps. The time limit on the lower tax cap of £50,000 for new Guernsey residents who have paid a minimum of £50,000 in document duty on the purchase of open market property if it takes place either 6 months before arrival or 6 months after arrival, is now extended to 12 months to recognise the time taken for some open market transactions.
Certain companies that are tax resident in Guernsey will need to declare that they meet minimum substance requirements i.e. That they carry out some form of economic activity in Guernsey. This mainly affects the finance industry but also covers company headquarters, intellectual property and shipping.
Beneficial ownership information – a commitment to putting legislation in place to allow access by EU tax and law enforcement agencies on a reciprocal basis. This will not be a public register.
Corporate income tax – minor extension of the 10% rate to the regulated activity of operating an investment exchange and to certain compliance activities.
Pensions - Tax free lump sum from a pension – limit has been set at lower of 30% of the fund value and £198,000
Contributions must be in monetary form and paid by the member. Contributions may not be transfers from another pension fund, or from funds withdraw from another pension fund or assets in specie.
Triviality is increased for members aged fifty or over to £50,000 per scheme taxable at 20% in the year of charge in which it is paid (currently the limit is £30,000 and the rate of tax is 10%); and
Triviality is introduced for schemes in drawdown where either the aggregate value of the fund attributable to the member at the time of the request is no greater than:
a. £50,000; or
b. £100,000 and the individual member has a guaranteed minimum retirement income of £20,000 per annum.
Mortgage interest relief – no longer to be available where the funds have been lent from a trust.
Double tax relief agreement with the UK – measures to be put in place to allow Guernsey resident beneficial owners of UK companies to receive relief for the underlying tax suffered on dividends paid to them.
Usual excise duty increases on fuel, tobacco and alcohol although Rocquettes Cider will be able to take advantage of a reduction in duty on beer and cider from a small independent brewery.
As always, we try and provide as much useful information as possible in our articles but if you would like further clarification on any point or to discuss your specific queries please call or come into the office and speak to one of our friendly team.