Proposed changes to rates of capital gains tax in the UK could well provide another reason to consider relocating to Guernsey. Capital gains tax for non-UK residents We are Guernsey accountants first and foremost, A Changing World: Capital Gains Tax in Guernsey. At present, the new rules do not extend to commercial property such as shops, factories, warehouses, etc. These have been drafted primarily to protect large institutional investors, and we do not expect that many small-scale landlords will be in a position to benefit from them. Please see our general guide to Guernsey income tax [258kb] for more information. There are some limited exemptions, particularly in respect of purpose-built student / armed forces accommodation, or where the property has previously been occupied as your main residence. Neither Collenette Jones Limited nor its directors or employees accept any responsibility for loss or damage incurred as a result of acting or refraining to act upon anything contained in or omitted from this document. With the cap applied, his tax bill would be: Qualifying income - tax capped at £130,000, Non-qualifying income          - £15,000 taxed at 20% £ 3,000, Total tax due                             £133,000. VAT. The cap is also proportioned in the year of your arrival in, or departure from, Guernsey. The definition of “high value” was initially set at £2 million, but has been extended on more than one occasion and will include all properties valued at £500,000 or above with effect from 6 April 2016. and pension / trust services under one roof. Sections 39B, 39C, 39D and the Sixth Schedule of the Income Tax Law limit the amount of tax payable by an individual resident in Guernsey/Alderney. But local residents who own residential property or other chargeable assets in the UK could potentially liable to pay the increased rates should the tax rise in the coming months. Net wealth/net worth taxes. The tax situation for Guernsey residents is as follows: 20% Income Tax(with generous allowances) NO Capital Gains Tax Please re-authenticate to start a new secure session. Capital gains– There is no capital gains tax. These notes provide a summary of who and which property is affected, and describe how a new UK tax return has to be completed within 30 days of the sale. Guernsey is to remain on Netherlands' list of low-tax jurisdictions for the purposes of enforcing certain anti-tax avoidance rules, the Dutch Ministry of Finance announced. The tax cap is based on the level of "qualifying" and/or "non-qualifying" income you have. Guernsey – a tax efficient jurisdiction Guernsey is a leading international financial centre with a good reputation and excellent standards: The general rate of tax payable by Guernsey companies is zero*. It is not a substitute for professional advice. The income tax position for fund vehicles is detailed below. We are a Guernsey based firm of Chartered and Certified Accountants providing a high level of service to Bailiwick of Guernsey clients. Guernsey does not levy a net wealth/net worth tax. Guernsey Property Unit Trusts (GPUTS) are a frequently used vehicle for holding UK real estate. or During the 2015/16 tax year, for an individual, the higher rate will be charged once total taxable income and gains (calculated after deducting any available tax-free allowances) exceed £31,865. No Guernsey income (other than bank interest) can be taken into account in this cap, so if you do have other income from Guernsey you will need to pay tax at 20% on this in addition to the £130,000 (subject to a further cap on qualifying and non-qualifying income - see below). Crossways Trustees Limited is licensed by the Guernsey Financial Services Commission. However, if a property has been purchased more recently, and is not believed to have increased in value, an estate agent’s opinion may be sufficient. In the UK, in respect of income tax and capital gains, for any year of assessment beginning on or after 6 April next following the entry into force date. Mr A is resident in Guernsey and has the following income: UK investments                   £ 400,000, French income                     £ 640,000, Total                                        £ 1,065,000, If the tax cap was not applied he would need to pay tax of. The content is current on 1 January 2020, with exceptions noted. The staff will need be told the nature of the new business, the date of commencement and, if possible, an estimate of profits for the first year of trading. Generally qualifying income is any income you have from outside of Guernsey and Guernsey bank interest. While created as a guide only, it provides a useful breakdown of how your capital gains tax is calculated. They’ve evolved in the decades since, but still include 0% tax on most company profits, a flat income tax rate and no inheritance, wealth or capital gains … Capital Gains Tax calculator for tax year 2020/21. The Guernsey income tax year is the same as the calendar year, 1st January and ending on 31st December. Guernsey does not levy an inheritance tax. In general, this Tax Guide does not reflect any COVID-19 tax policy measures. Preparation of tax returns. A return must be made to HMRC to inform them of the sale, and provide a computation of any gain arising, within 30 days of completion of the sale. Switzerland, one of the world’s renowned centers of banking and stores of wealth, makes the list with no capital gains tax on trades of securities. This article touches on some of the key points local residents might want to bear in mind, the rates of tax applied to capital gains made by individuals and companies, and simple steps that can be taken to protect historic gains from the hands of the UK tax-man. If you would like to see more in depth detail, please refer to the download section. Most importantly, speak to us before you sell. The Dutch blacklist contains eight jurisdictions that are currently banned by the EU, as well as a further 15 low-tax jurisdictions, including Guernsey, Jersey and the Isle of Man. *some browsers' menu buttons may vary. A 10% rate of corporation tax is applicable to income arising from certain regulated activities including banking and insurance. Capital Gains Tax is now a consideration for Guernsey residents when investing in UK residential property. Sign In. The rules intend to capture disposals of residential property in the United Kingdom by all non-residents. Guernsey includes all the islands in the Bailiwick, except Sark (including Brecqhou and Jethou) for income tax purposes and the income tax rate is 20%. Any income from Guernsey is treated as "non-qualifying income". The three tax rates for companies in Guernsey are as follows: Company Standard Rate – 0%, income from … Personal tax: 20%: Corporate tax (in detail) A general rate of tax of 0% applies for all companies carrying on business on the islands. Deductions and allowances– Personal allowances are available to the taxpayer and his/her spouse/civil partner. Guernsey has a flat tax rate of 20 percent for individuals. The menu button may look like Guernsey, an island in the English Channel, has a cap on income tax and no inheritance or capital-gains taxes. This will also affect payment of contributions in respect of your spouse if they are self-employed, non-employed or over pension age, and you are jointly assessed for Tax purposes. Guernsey has a basic rate of corporation tax of 0% on profits arising applicable to most companies which are Guernsey tax resident. Areas of Expertise. This Open Market Tax Cap applies in respect of both qualifying and non-qualifying income as defined in point 1. We can advise you on the information you will need to gather to calculate any capital gain, and the tax due. It is worth noting here that companies may be exposed to other taxes that do not apply to individuals, particularly the Annual Tax on Enveloped Dwellings (“ATED”). In Guernsey, in respect of income tax, for any year of charge beginning on or after 1 January next following the entry into force date. Discover more about our accounting services and talented local staff team. Cantonal and municipal taxes are imposed on both types of property. Company tax. For the latest developments, access the EY Tax COVID-19 Response Tracker. Income Tax. Keep up-to-date on significant tax developments around the globe with EY’s Global Tax Alert library. The new non-resident capital gains tax came into force in Guernsey on 6 April 2015. If they have been capped previously then the limits of £130,000 and £260,000 continue to apply. It might be a slightly cynical point of view, but that is nonetheless what the UK Government have done by extending the scope of Capital Gains Tax to non-UK residents who own residential property situated in the UK. The main taxes are income tax at one rate of 20%; social security contributions are also payable. Unless you already complete UK self assessment tax returns, and tax due also needs to be paid within this timeframe. The official website for the States of Guernsey. If you are self-employed, non-employed, or over pension age and elect to take advantage of the Tax cap, you will be assessed at the maximum weekly rate for the payment of Social Security contributions. The legislation was introduced to meet a commitment made to the EU Council to address concerns that Guernsey’s 0% corporate income tax rate could facilitate offshore structures aimed at attracting profits which do not reflect real economic substance. Guernsey has a favourable personal and corporate tax regime with no Capital Gains, Inheritance or Value Added Taxes. We provide a total suite of accounting, assurance, tax, company formation and administration, Guernsey has a very favourable personal and corporate tax regime, with no general capital gains tax, inheritance tax or estate duty, purchase or sales tax, VAT, capital transfer tax or council tax. Heavy rain or sleet clearing around dawn to sunny intervals and showers, some heavy with the risk of hail. This article touches on some of the key points local residents might want to bear in mind, the rates of tax applied to capital gains made by individuals and companies, and simple steps that can be taken to protect historic gains from the hands of the UK tax-man. No Guernsey income (other than bank interest) can be taken into account in this cap, so if you do have other income from Guernsey you will need to pay tax at 20% on this in addition to the £130,000 (subject to a further cap on qualifying and non-qualifying income - see below). UK Chancellor Rishi Sunak recently commissioned a report which recommends a major overhaul of capital gains tax or CGT. Inheritance Tax. A tax rise is never popular, so what could be better (from the Government’s point of view, at any rate) than inflicting one on somebody who cannot vote against you? Tax is payable at the rate of 20% on net income after allowances (see the Deductions section for a description of allowances). We all realise that we live in a world where governments have for many years spent more than they have earned, and are trying to balance their books in an environment where household incomes are squeezed. HMRC have historically been disinclined to accept estate agent’s opinions, and many people consider that a relatively inexpensive report from a Chartered Surveyor is a worthwhile investment where substantial pre-April 2015 gains exist. Guernsey has no VAT, death duties, inheritance taxes, capital gains, transfer or wealth tax. But buying a home isn’t easy in this 30-square-mile tax haven. As a self-governing British Crown Dependency, the island’s own system of taxation offers a long-standing, competitive regime that meets OECD standards of transparency and information … Capital Gains Tax is a tax on the profit when you sell (or ‘dispose of’) something (an ‘asset’) that’s increased in value. Moving forwards, it will be important to retain receipts for any substantial improvements to property that might increase its capital value such as, for example, an extension or replacement of a lean-to with a new conservatory – these costs can be deducted when calculating capital gains on sale. Showers die out tonight with fair periods. Income tax is generally a flat rate of 20%. If you have a high level of income from both in and outside of Guernsey, or just Guernsey income, then the maximum tax that you pay is capped at £260,000 for 2019 (but this does not include income from land and property in Guernsey; tax is payable on this income in addition to the cap). The limit of tax payable on this income is £130,000 for 2019. In brief, Capital Gains Tax (“CGT”) may be charged on a non-UK resident who sells a residential property of any value, where the sale is completed on or after 6 April 2015. Of course, Switzerland taxes capital gains on other investments as income, but foreigners may be able to avail of a flat tax scheme as well. Consumption tax. Guernsey does not have CGT. Please contact us for a no obligation discussion of your accounting needs. Katie joined LTS Tax Limited in March 2019 and deals with a wide range of UK and Guernsey tax matters including providing services to high net worth individuals and senior executives on Guernsey and UK tax matters and providing tax compliance for Guernsey companies. The limit of tax payable on this income is £130,000 for 2019. This article has been prepared as a general guide. Tax on salaries is deducted at source. If you own, or are thinking of investing in, UK residential property and would like to discuss how these rules impact on your particular circumstances, please get in touch with me. by husband and wife), each owner will be entitled to an annual allowance and basic rate (18%) tax band (in 2015/16, this would mean that the first £22,200 of any gain was exempt from tax). Increasing capital gains tax rates to bring them into line with income tax could raise £14 billion for the Treasury, a report commissioned by Chancellor Rishi Sunak has suggested. There is no change to the Guernsey tax position – Guernsey does not charge tax on capital gains. Certain specified activities in Guernsey are taxed at higher rates. It is worth noting that, where a property is jointly owned (e.g. It is possible to elect for alternative treatments, but in the majority of cases this will be your “base cost” for the purposes of calculating any tax liability on sale – only an increase in value after 6 April 2015 is taxable. Rates– Guernsey residents are liable to tax at 20%. This is usually on the bias of a non UK resident individual or entity. For an Alderney resident their "Alderney qualifying income" is income from all sources, regardless of where it is from, except for any income from Guernsey/Alderney land and property, which is taxable in addition to the cap. In this instance, if their assessable income is below the maximum amount of £149,760 they should provide details of their worldwide income (for the relevant year of charge), so that this can be considered for the basis of their contribution liability. Guernsey introduced economic substance legislation for accounting periods commencing on or after 1 January 2019. ATED is payable for every year during which a “high value” property is available for the private use of the company’s owners, or persons connected to them. It may be possible to take simple steps to minimise liabilities (particularly if more than one property is to be sold) but only if action is taken before the sale completes. If you are just getting started, try this overview of Accountancy on Guernsey.LinksKey Calendar Dates - for accountancy on GuernseyAccountancy - Frequently Asked QuestionsContact - Collenette Jones. Collenette Jones is the trading name of Collenette Jones Limited and Crossways Trustees Limited. There is no capital gains tax, inheritance tax, value added tax or withholding tax. It’s the gain you make that’s taxed, not … As expected it suggested the Government considers realigning current CGT rates with personal tax rates – potentially increasing the rate of the tax from 28 per cent to 40 per cent (in some cases 45 per cent) for a higher rate tax payer. Fortunately, there are some very simple steps you can take that will help to protect historic (that is, pre-6 April 2015) gains from UK tax. Property owners and occupiers may be … No stamp or document duty, or transfer tax, is payable in respect of companies, unit trusts or limited partnerships that are collective investment schemes. We provide a total suite of accounting, assurance, tax, company formation and administration, payroll, pension and trust services under one roof. Historically, CGT has only been paid by individuals or companies that are resident in the UK; any gains arising on the sale of UK property have been tax-free for Bailiwick of Guernsey residents. Guernsey does not levy a tax on capital gains. In general, economic substance legislation is not expected to apply to Guernsey funds, but can app… The definition of “residential property” is wide and, to all intents, includes any building that a person can live in. CGT is calculated differently for companies and for individuals – the same disposal would give rise to different taxable gains, to which different rates of tax would be applied. The majority of persons owning UK residential property, either as an individual or via a company, will almost certainly be affected by the changes, which came into effect on 6 April 2015. It comes as Whitehall seeks to find a way of paying back the billions of pounds borrowed to support the economy through the Covid-19 crisis. A resident of Alderney, who hasn't previously been capped as above, will be capped at £50,000 on their "Alderney qualifying income", for each year from 2016 to 2025. With its … Guernsey levies no capital gains, inheritance, capital transfer, value added or general withholding taxes. From 6 April 2015, UK CGT will be paid by non-residents in the same way that it is paid by UK residents. If you have enough income to qualify for the tax cap, you won't be given any personal allowances. Capital Gains Tax is now a consideration for Guernsey residents when investing in UK residential property. Individuals will receive the same annual CGT allowance that is available to UK residents – for the 2015/16 tax year, this means that the first £11,100 of any gain will be exempt from tax. The remainder of the gain will be taxed at 18% or 28%, depending on the total UK income and gains arising in the year. We have created a Capital Gains Tax calculator that will provide you with an estimate of how much capital gains tax you would have to pay on the sale of a property or the disposal of shares. From 1 January 2018, a new resident to Guernsey (who has not been resident in Guernsey in the previous 3 years) may claim a tax cap of £50,000, for the year they arrive in Guernsey and the following 3 years. There are no capital gains, inheritance or sales taxes. Guernsey does not levy any form of capital gains tax, inheritance tax or value added tax. In addition, the capital gains tax liability of a company that is subject to ATED is calculated at a rate of 28%. If you are able to take advantage of the cap, you don't need to complete the personal return each year with details of all of your income, but you can complete a Tax Cap form which is only 1 page long. Written Questions from States Members (Rule 14), Guernsey's "Revive and Thrive" Recovery Strategy, Code of Conduct for Members of the States of Deliberation, Affordable Housing, Benefits, Allowances & Support, Revenue Service (formerly Income Tax & Contributions), Tell Us When You Move Home or Leave the Island, Income Tax (Guernsey) Law, 1975 - Section 39B, Income Tax (Guernsey) Law, 1975 - Section 39C, Income Tax (Guernsey) Law, 1975 - Section 39D, Income Tax (Guernsey) Law, 1975 - Sixth Schedule. Tax due on income arising from Guernsey land and property would need to be paid in addition to the Open Market Cap. If you have owned UK property for a number of years, the most important point is to obtain an opinion of its value as at 5 April 2015. Penalties apply where the return is not submitted on time (even if there is no tax liability). Mr B is resident in Guernsey and has the following income, UK investments                         £ 350,000, French income                           £ 640,000, Guernsey Bank Interest            £ 10,000, Guernsey wages                           £ 425,000, Guernsey rental income              £ 19,000, Guernsey loan interest                £ 250,000, Total                                                £ 1,694,000, Qualifying and non-qualifying income - capped at £260,000, Tax on Guernsey rental income           £19,000 at 20% £ 3,800, Total tax due                                            £263,800. Collenette Jones is a Guernsey based firm of Chartered and Certified Accountants providing a Guernsey does not levy any value added, goods and services or consumption taxes. Guernsey has introduced zero basic rate corporation tax on profits arising on most business carried out on the Island. Companies are taxed at a flat rate of 20% on the entire gain – there are no tax-free amounts for companies, but they are entitled to claim an “indexation allowance” (effectively, increasing the initial purchase price in line with inflation). A summary of the tax caps and the impact these will have on your Social Security Contributions are provided below. Gains from selling private property are not federally taxable while gains from business property are taxed as income. Any gains realised on sale of these types of property by non-UK residents currently remain outside the scope of UK tax. Details: Capital gains in Guernsey are not subject to tax. Guernsey has a formidable reputation for being well-regulated and is highly respected across the world. high level of service to Bailiwick of Guernsey clients. Mr C is resident in Alderney and has the following income, he has not previously been capped, UK investments                    £ 150,000, French income                      £ 50,000, Total                                          £352,000, Guernsey rent                           £12,000 at 20% £ 2,400, Total tax due                             £52,400. The type of valuation you need to obtain will depend on individual circumstances. Your session has expired. Capital gains tax. This cap can only be claimed if the individual has paid £50,000 or more in document duty on the purchase of a property, that is on Part A of the Open Market Register, and that property is purchased within 12 months (either before or after) they take up permanent residence in Guernsey. It is possible for a Guernsey resident individual to elect for a cap on their income tax liability. Capital gains tax. 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