• Guernsey Introduces a £50,000 Tax Cap
Article:

Guernsey Introduces a £50,000 Tax Cap

15 November 2017

André Trebert , Executive Director |

On 8 November the States of Guernsey approved the Island’s Budget for 2018.

Included within the proposals which subsequently received approval was a measure designed to simultaneously stimulate Open Market Property sales and attract wealthy residents to Guernsey. From January 2018 a temporary tax cap of £50,000 per annum is introduced for any new resident subject to certain conditions.

Those conditions are that the individual must have previously been non-Guernsey resident in the 3 years prior to the year of arrival and must have purchased an Open Market property in Guernsey and, as a result of the purchase, paid document duty of at least £50,000. Document Duty is charged at the rate of 3% on the value of the property purchased.  The property purchase must have been made within a period of 6 months before and 6 months after taking up permanent residence in the Island.

The Open Market refers to the category of Guernsey residential property that can be occupied without restriction. Some Guernsey property (the Local Market) may only be occupied by long standing residents or workers meeting skills shortages.

The tax cap will apply in the year of permanent arrival in Guernsey and the subsequent 3 tax years. This cap will not apply to income from Guernsey property which will continue to be taxable at the rate of 20%.

This is an excellent measure which retains Guernsey’s competitiveness at a time when other jurisdictions are introducing favourable regimes to try and entice high net worth individuals to their shores. The measure should boost sales of property valued around £1.67 million and so should stimulate sales of larger properties in the mid-range of the Open Market.


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Contacts

If you would like further advice or information in relation to the issues outlined within this document, please do not hesitate to get in touch with your usual BDO contact or any of the individuals listed below:

 

ANDRÉ TREBERT
Tax Director
BDO Limited, Guernsey

t: +44 (0)1481 741610
e: [email protected]

 

JOHN BRADLEY
Tax Director
BDO Limited, Guernsey

t: +44 (0)1481 741609
e: [email protected]

 

MARK SAVAGE
Tax Director
BDO Limited, Guernsey

t: +44 (0)1481 748450
e: [email protected]