On 20 February 2018 Treasury Minister Alf Cannan delivered his second Manx Budget.
On 20 February 2018 Treasury Minister Alf Cannan delivered his second Manx Budget. The key Isle of Man Income Tax measures introduced in the Budget were as follows:
- Income Tax Personal Allowance increased by £750 (£1,500 for a married couple) to £13,250 (£26,500) for 2018/19
- Some minor changes to National Insurance Contributions for 2018/19:
- Lower Earnings Limited (LEL) increased by £3 to £116
- Class 2 rate for volunteer development workers increased by 15p to £5.80
- Class 3 rate for voluntary contributions increased by 40p to £14.65
- All other income tax rates and personal allowances remain unchanged (subject to below)
- Tax relief for nursing expenses remains at £12,500 but will extend to the costs of engaging a qualified physiotherapist in certain situations
- Assessor to consult on proposal that Banks pay tax at 10% on all income (not just banking) profits from 2019
- Total annual value of tax-free benefits-in-kind increased by 50% to £600 from 2018/19
- Improvements to Cycle-to-Work Scheme from 2018/19:
- £1,000 limit on total cost of bicycle and equipment removed
- maximum tax deduction of £1,000 permitted for any employee in a period of 3 consecutive years
- exemption extended to include “electric bikes”
- relief can be used in conjunction with general benefits-in-kind exemption of £600
- Income tax relief on pension contributions restricted to £50,000 pa from 2018/19
- Trivial commutation and pension fund remnant lump sum limits increased to £100,000 (up to £142,857 including the 30% tax-free lump sum) from 2018/19
- “Pension Freedom Scheme” (“PFS”): new-style pension arrangements introduced from 2018/19:
- 40% tax-free lump sum
- unrestricted access to remainder of fund (taxed as income on receipt)
- transfer from existing approved schemes permitted, subject to 10% transfer charge
- investment income of fund exempt from Manx income tax
- contributions limited to £50,000 per annum
- no tax charge on death (but funds must be paid out within 2 years)
- Anti-avoidance rule introduced from 20 February 2018 where unquoted shares or goodwill are sold to a company with undistributed reserves:
- where consideration is left outstanding on loan account as a result of a post 4 April 2011 sale, loan repayments post 19 February 2018 will be taxed as dividend income to extent of distributable reserves of company
- where sale takes place post 19 February 2018 consideration will be taxable as dividend income to the extent of the distributable reserves of company.
Please contact any of the below or your usual contact if you would like information regarding any of the above.
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