IOM Tax Solutions
Man is born free but everywhere he is in chains....
Moving to the Isle of Man
It is essential that you speak with your tax advisor in advance of your arrival so any advice can be issued. This is particularly important in regard to UK Capital Gains tax, Income tax and to a lesser extent, initially at least, Inheritance tax which can be mitigated with some careful tax planning in the future. As soon as possible after your arrival in the isle of Man you should register with the Income Tax Division. Have you made a break from the UK - HMRC are increasingly looking at the links that you have to the UK such as home, business, family rather than day counting rules. HMRC6 is a document which sets out their views for treatment and can be found at HMRC's web site. HMRC are actively looking at residence issuing a consultation document which is proposing drastic changes to the way in which residence will be determined. HMRC are intending that an individuals residence will be assertained under self assessment.
It is important to remember that your employer is not responsible for registering you for tax. Your application for a work permit does not register you for tax and your registration with DHSS does not register you for tax.
There are a number of significant differences between the United Kingdom and the Isle of Man taxation system:
All taxpayers (with few exceptions) complete an income tax return form every year declaring their worldwide income
Penalties will be applied if return forms are not submitted within six months of issue. Return forms are ordinarily issued on 6 April for the preceding tax year. The first penalty is £100 if the return is not submitted (ordinarily by 6 October) with a further penalty due of £100 if the return is not submitted by the following 6 April.
Tax allowances for jointly assessed married couples can be transferred during the tax year, and both spouses can be pursued for the joint tax liability.
There are no additional tax allowances or credits for having children, however an additional personal allowance may be available if you are a single parent with a child under 19 years old and in full-time education
Tax relief is given on mortgage and loan interest, subject to certain conditions. The current maximum is £10,000 per individual or £20,000 for married couples.
Banks and building societies do not deduct tax at source, therefore all interest received must be declared on the income tax return form
There is no Capital Gains Tax and there is no Inheritance Tax in the Isle of Man. You may however be exposed to these taxes in other countries if you own assets there and may wish to plan to avoid these.
A deduction is also available for health insurance if over 60 years of age and to a maximum of £1,800 per individual. Most policies qualify but there are certain restrictions on policies especially concerning payment of a cash benefit
Relief is given for charitable donations £7,000 maximum total from 2008 and Deeds of Covenant which are not restricted
The Age Allowance is a new personal allowance which was introduced from 6 April 2008 for all resident individuals who are aged 65 or over at the start of the tax year. The amount of the allowance will be £2,040 with a pro-rata reduction where a person has ceased or commenced residence in the Isle of Man during the tax year. For jointly assessed married couples, the allowance will be doubled to £4,040 where both spouses are over the age of 65 at the start of the tax year. Any unutilised balance of the allowance can be transferred between spouses in the year of marriage or to the surviving spouse on death.
You can elect to be jointly assessed in the Isle of Man which is in most circumstances the preferred choice. The Marriage section provides in depth detail on this. The default position is independent taxation. Care needs to be taken if you are a tax capped individual.
Key points We will address where applicable will be
Company set up and incorporation
Employment and payroll
Personal tax and tax registration
VAT & VAT registration
Wealth protection - Income Tax , IHT & CGT