By Jo Stoddart, Managing Director Quintessential Relocations Consultants
First things first, let’s deal with the elephant in the room and clarify the mistake that lots of people make! Guernsey is definitely NOT a “Tax Haven”. However, it’s not just our wonderfully safe environment, beautiful beaches and opportunities for a family-friendly lifestyle which attract people to our shores – the island does offer a more advantageous tax regime than a lot of places and this is definitely a factor which is taken into consideration by businesses and individuals alike when considering relocation to Guernsey.
It’s always advisable to speak to an expert about your own particular set of circumstances because, as with many things in life, tax is definitely not a “one size fits all”. However, not only is the general rate of income tax lower in Guernsey than in many other places, there are fewer taxes to pay. For example, did you know that in Guernsey there is:
· No VAT
· No Capital Gains Tax
· No Inheritance Tax or other wealth tax
· No Council Tax
· No Road Tax
If you are coming to work on the island you need to know that income tax for Guernsey residents is calculated at 20% after some very generous personal allowances. Residents also have to pay Social Security which goes towards the cost of medical care, pensions and other benefits. Those who are employed pay Social Security at a rate of 6% of their earnings (deducted at source by their employer – the employer contributes 6.5% on top of this amount) although there are upper and lower earnings limits which apply. If you are self-employed then you pay Social Security at a rate of 10.5%.
If you come to Guernsey on holiday you will notice immediately that there is no VAT or any other form of goods and sales tax, so straightaway consumer goods should cost less than in mainland Britain (worth bearing in mind if you are planning on buying something from a UK retailer with an outlet in Guernsey – you will pay less for it here!). An advantage for local residents is that when we order goods from the mainland we can have the VAT deducted so if we go on a shopping spree in a country where VAT is charged we can claim the tax back at the airport before coming home – always a nice end to a trip!
Guernsey residents do pay a local tax to cover the cost of rubbish removal, maintenance of the local infrastructure, roads, schools etc. This tax is called the “Tax on Real Property” (our equivalent to the UK’s Council Tax) which is calculated according to the size of property they occupy. However most Guernsey residents pay per annum what someone in the UK might pay per MONTH – even for a large family home you probably wouldn’t pay much more than £300 per year, so it’s a big saving.
As mentioned earlier, depending on your circumstances it is REALLY important to speak to a tax adviser who can discuss your particular circumstances and help you to understand what you need to know about tax. QRC offers clients a complimentary consultation with one of the island’s tax advisers so please contact the team at QRC firstname.lastname@example.org who can make the necessary arrangements. However you might find answers to some of your questions by checking out our series of very short videos answering tax FAQs – have a look at this link and scroll down to see the other titles in the series.
So Guernsey is definitely NOT a tax haven but it does offer a very advantageous tax regime which makes the island a very attractive proposition from lots of perspectives.
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