HN21 - Guernsey’s New Tax Cap

In October 2009, legislation was approved to reduce the tax cap on foreign source income and Guernsey deposit interest for individuals to £100,000 per annum. Guernsey residents can also restrict their liability to tax on Guernsey source income to an additional £100,000. The same rights apply to a married couple as to a single person.

In addition under the new provisions, an individual with combined annual foreign and Guernsey source income totalling more than £1,000,000 can limit their tax liability to £200,000 per annum.

Previously a tax cap existed which, when reviewed, was not considered competitive in comparison to a number of other jurisdictions. The previous tax cap affected Guernsey residents who were in receipt of non-Guernsey source income (and Guernsey deposit interest) exceeding £1,250,000 per annum. The cap restricted an individual’s liability to Guernsey tax on the income to £250,000. Guernsey source income (other than bank deposit interest) was subject to tax at the normal rate.

Guernsey’s new tax cap increases the attractiveness of Guernsey as a jurisdiction for individuals who are currently considering relocating.

If you require additional information on this topic please contact John Nelson at the Dixcart office in Guernsey: john.nelson@dixcart.co.gg