Income Tax Frequently Asked Questions
I've just arrived in Guernsey, what do I do?
- Contact us
- You can register with us by using the online form available by following this link or you can ask your employer to register with you. The registration process is straightforward and once we have received the completed form we will send you an income tax reference number and a coding notice once you have secured a job.
- Available guides
My circumstances have changed, what do I do?
- I have just got married, what do I need to do?
- You will need to tell us that you have married and we will require the name of your spouse and the date of your marriage. Separate tax returns must be completed for the year you marry and an assessment will be issued to each of you individually. The tax returns that are submitted in the years following will be made by the husband in an opposite-sex marriage, or the eldest spouse in a same-sex marriage, and must include income from both spouses. Future assessments will be issued and made in the name of the husband or the eldest spouse.
- Can I be assessed separately?
- Either spouse can, request to be assessed separately, but this request must be received in writing, by 31 March in the year following your marriage or by 31 March in the year you wish it to commence. If you are assessed separately, you will each complete your own tax return and your tax affairs will be kept separate.
- I have separated/divorced, do I need to tell you?
- You will need to contact us, in writing, to confirm the date that you separated. Ideally this should be signed by both of you. A new coding notice will be issued to reflect your change in circumstances and your income tax affairs will be kept separate from this date.
- I have had a baby, do you need to know?
- No, having a child does not affect your income tax unless you are a single person then it is worth letting us know that your circumstances have changed and we can update your records.
- I have given up work, how does this affect my income tax?
- If you have given up work there is no necessity to contact us unless you are in receipt of income that does not have tax deducted at source.
- I have changed my job, do you need to know?
- Yes, If you have changed your job you can request a new coding notice by following this link.
- I have been made redundant from my job, do I need to pay tax on my redundancy pay?
- It is best to contact us and provide a copy of the redundancy letter and details of the redundancy package you have been offered from your employer, as each case is dealt with individually and it would depend on the reasons for the redundancy and how much is received. Further information is available at Statement of Practice E11 (located in the October 2014 Statements of Practice booklet via "Practitioners and technical information" and "Statements of Practice (Including Interpretations of Law) & Extra Statutory Concessions" drop-down options) if a payment is treated as a termination payment for Guernsey income tax purposes.
- I am leaving Guernsey, what do I need to do?
- If you are leaving Guernsey you will need to complete a " Leaving Guernsey [366kb]" checklist. You will need to ensure you have a forwarding address, a copy of your final payslip attached, and are able to provide all other necessary information prior to your departure from Guernsey.
- I am buying a house, how can I claim relief for my mortgage?
- If you are buying a house you will need to complete a " Buying Property [272kb]" checklist. If you have taken out a mortgage on your new property you may be able to claim tax relief on the interest paid, therefore it is important that the checklist has been completed and submitted to us. A guide on claiming allowances and the relief available to you on the mortgage interest paid is available by following this link under the 'Rates and Allowances' section.
- I am retired, do I need to pay Tax on my pension?
Civil Partnerships and Same-Sex Marriage
- On 21 September 2016, the States approved the draft Projet entitled The Same-Sex Marriage (Guernsey) Law, 2016. From 1 January 2017, for income tax purposes, civil partnerships and same-sex marriages will be legally recognised in Guernsey.
- People who have entered into a same-sex marriage or a civil partnership will be treated in the same way. Both couples will be assessed jointly (unless a request is made to be separately assessed) and they will be entitled to a married persons allowance (for more information follow this link and see Summary of Allowances under "Rates and Allowances"). The responsibility for dealing with the tax affairs of the couple will be with the elder partner.
- Below are some frequently asked questions which we hope will help you to understand this process, but if you are unsure, would like more information, or wish to speak with a tax assessor, please contact us on 01481 740123 or 01481 724711, ensuring you have your tax reference number to hand.
- What is meant by a "civil partnership"?
- A civil partnership is a relationship between two people of the same-sex, formed when they register as civil partners of each other. This should be registered either under the UK Civil Partnership Act 2004, the Civil Partnership (Jersey) Law 2012, or an equivalent law in another territory. The relationship will end only on death, dissolution or annulment.
- Do we need to tell you when we enter into a same sex marriage or civil partnership?
- If you have entered into a same sex-marriage or civil partnership prior to 1 January 2017 you need to tell us as soon as possible, as you will be treated as married for 2017. You will need to submit a joint return for 2017, unless you ask for separate assessments. If you wish to be separately assessed for 2017, you have until 31 March 2017 to make the election.
- If you enter into a same-sex marriage or civil partnership after 1 January 2017 you will need to tell us and will need to submit separate returns for the year of marriage and a joint return for the year following your marriage. You can elect to be separately assessed; if you do, you will each need to complete an income tax return each year. If your marriage takes place in 2017, a request for separate assessments can be made at any time after the ceremony, as long as this is done before 31 March the following year.
- Either partner may elect to be separately assessed but it may only be withdrawn in writing, by whoever made the original request.
- Do we have to submit a joint income tax return?
- Yes, unless you request to be assessed separately, but you will need to do this in writing before 31 March.
- Can we choose which one of us will be responsible for the completion and submission of our annual income tax returns?
- No. The eldest partner will automatically become responsible for both of your income tax affairs, unless a request for separate assessments is made. Requests must be made in writing by 31 March.
- Can we be separately assessed?
- Yes. You can request separate assessments as long as the request is received in writing and made in the year of marriage, or before 31 March in any given year.
- Are we able to transfer allowances between us in the coding notice?
- Yes, you can transfer allowances between you if you have a joint assessment.
- Coding notices will be issued to you both with allowances divided between you, but if you want them split in a different way you will need to complete a 'Division of Allowances form' (available on our website under "Other tax forms") and revised coding notices will be sent to your employers.
- Will you recognise a civil partnership that took place prior to 1 January 2017?
- Yes, but we are only able to change the way your tax affairs are dealt with from 1 January 2017. No change will be made to the way you were treated for income tax purposes for earlier years, but your affairs will be dealt with jointly with effect from the calendar year 2017, unless a request for separate assessments is made.
- What do we do if we separate?
- If you separate you need to tell us so that we can bring your income tax affairs up to date. You will be treated as single from the date of your separation. The date of separation will need to be agreed by you both and confirmed in writing to us.
- The date of separation should be from when you no longer live as a couple rather than when your civil partnership or marriage is dissolved.
- We are an unmarried same-sex co-habiting couple, can we claim any additional allowances?
- From 1 January 2017, a same-sex co-habiting couple may relinquish unused personal allowances between themselves if they co-habit for the full calendar year and are in receipt of Guernsey Family Allowance. For more information see our Guide to claiming allowances and reliefs [289kb] .
Withdrawal of personal allowances for high earners
- How many islanders will this affect?
- It is anticipated that 1,150 individuals will be affected by this change, which is approximately less than 3% of the island's population.
- How much revenue will this change collect?
- It is estimated that by introducing the withdrawal of personal allowances for high earners with effect from 1 January 2017 it will raise c. £2.4 million each year.
- How will the withdrawal be calculated?
- Your personal allowance will be withdrawn gradually at a rate of £1 for every £3 that your income exceeds the upper earnings limit on social security contributions, which will be £138,684 in 2017. This limit will be pro-rated in the year of arrival or permanent departure. The table below shows the effect of this proposal on a single individual under the age of 64:
Income Personal Allowance withdrawn Personal Allowance received £138,684 £ nil £10,000 £140,000 £ 438 £ 9,562 £150,000 £ 3,772 £ 6,228 £160,000 £ 7,105 £ 2,895 £168,684 £10,000 £ nil
- How will the withdrawal of personal allowances work if I am married or in a civil partnership?
- From 1 January 2017 a married persons allowance is due to all married couples and those in a civil partnership. The allowance is claimed by the lead customer, who is responsible for the tax affairs of the couple (in our examples referenced as spouse 1), this being the husband in a opposite sex marriage and the elder partner in a same sex marriage or civil partnership. The allowance is £20,000 for 2017. If the spouse has any income they are entitled to a "spouses income allowance" with the married persons allowance being reduced by £1 for every £1 of the spouses income allowance given. The maximum spouses income allowance granted will be £10,000, unless the lead customer's income is less than £10,000.
- In order to calculate the amount of personal allowances due, each spouse's income will be looked at separately, as shown in the examples below:
- Example 1 - Spouse 1 has income of £300,000 and spouse 2 has no income. They are due the married personal allowance of £20,000, which will be restricted as their income is above the withdrawal threshold. The married persons allowance will be withdrawn at a rate of £1 for every £3 that the income exceeds the limit. In this example the full allowance will be withdrawn (£300,000 - £138,684 divided by 3 = £53,772 which is restricted to the removal of the full £20,000 allowance).
- Example 2 - Spouse 1 has income of £150,000 and spouse 2 has income of £8,000. They are due a married personal allowance of £12,000 and a spouses income allowance of £8,000. As the lead customer's income is above the withdrawal threshold, the married personal allowance granted of £12,000 will be withdrawn at a rate of £1 for every £3 the income exceeds the limit. In this example £3,772 will be withdrawn (£150,000 - £138,684 divided by 3 = £3,772). The income allowance of spouse 2, amounting to £8,000, is granted in full (as the spouse's income is not above the withdrawal threshold). So the couple will receive personal allowances of £16,228 [(£12,000 - £3,772) and £8,000].
- Example 3 - Spouse 1 has income of £5,000 and spouse 2 has income of £185,000. They are due a married persons allowance of £5,000 and a spouses income allowance of £15,000 (as the lead customer is not utilising the full allowance the excess is transferred to the spouse). As the lead customers income is below the threshold then the £5,000 allowance is granted in full. The spouses income allowance is reduced at a rate of £1 for every £3 that the spouse's income exceeds the withdrawal threshold. In this example the full spouses allowance will be withdrawn (£185,000 - £138,684 divided by 3 = £15,438 which will be restricted to the withdrawal of the £15,000 spouses income allowances due). This couple will receive personal allowances of £5,000.
- What happens if I have a mortgage and my income is above the limit?
- Any allowable mortgage interest paid is deducted from your income before the calculation of the allowances due to you is made.
- Example 4 - Mr A is single and pays £6,000 mortgage interest on his principal private residence. His income is £170,000 so his assessable income is therefore £164,000 (£170,000 - £6,000). As this exceeds the withdrawal threshold his personal allowances will be withdrawn at a rate of £1 for every £3 the income exceeds the limit. In this example £8,438 of this allowances will be withdrawn. (£164,000 - £138,684 divided by 3 = £8,438). Mr A will receive personal allowances of £1,562 (10,000 - £8,438).
- If my spouse and I apply for separate assessment, will less personal allowances be withdrawn?
- No. A married couple will in total pay the same amount of income tax whether they are jointly or separately assessed.
- Do you take my pension contributions into account when you calculate the allowances to be withdrawn?
- If you are employed, the contributions made to either your employers scheme, or your own personal pension, will be taken into account before we calculate what will be withdrawn.
- If you do not have employment income the contributions made to your personal pension scheme will be given as an allowance after the calculation has been made.
- Example 5 - Mr B is married and pays £4,000 into his employer's pension scheme and a further £6,000 into his Retirement Annuity Trust scheme. His spouse does not work. His employment income is £185,000, therefore, his assessable income is £175,000 (£185,000 - £10,000 (£4,000 + £6,000)). As this exceeds the withdrawal threshold his personal allowances will be withdrawn at a rate of £1 for every £3 the income exceeds the limit. In this example £12,105 of his allowances would be withdrawn (£175,000 - £138,684 divided by 3 = £12,105). Mr B would receive personal allowances of £7,895 (£20,000 - £12,105).
- Example 6 - Mrs C is single and self-employed. Her business profits are £160,000 and she pays £5,000 into her Retirement Annuity Trust scheme, her assessable income is £160,000. As this exceeds the withdrawal threshold her personal allowances will be withdrawn at a rate of £1 for every £3 the income exceeds the limit. In this example £7,105 of her allowances would be withdrawn (£160,000 - £138,684 divided by 3 = £7,105). Mrs C would receive personal allowances of £2,895 (£10,000 - £7,105) and her retirement annuity relief of £5,000.
I've received my statement and assessment but I don't understand them, where can I get some guidance?
- The statement will show you the tax that has been credited from the contributions made through your employer and will be grouped into years. The easiest way to understand your statement is to look at each year in isolation as this will show you the tax you have paid and the tax your assessment has calculated. If there is a difference between the two this will result in either tax owing or a repayment.
My statement shows I'm in credit, what does this mean?
- This could be for a number of reasons, mostly this will be because you have paid more tax through the contributions made by your employer than you need to pay once all of your income has been added together. If a repayment is due it will be sent to you within 4 weeks of receiving your statement.
Why does my statement say I owe tax?
- Your coding notice included too many allowances
- Sometimes your coding notice will include allowances, such as mortgage interest, which are estimated. When a figure is included in your coding notice it is for the full calendar year and are based on the figures provided either when you purchase the property or from the latest tax return submitted to us. Therefore, it can sometimes be difficult to accurately predict what interest you are likely to pay for the coming year, unless you have a fixed rate mortgage.
- You are receiving UK, Jersey or overseas old age pension
- Another example of an underpayment of tax could be when you begin to receive an old age pension from the UK, Jersey or overseas. As these pensions do not have tax deducted before it is paid to you we are not aware of the rate of pension you will receive, therefore, it is difficult to put in place measures to try and avoid a bill. We are sometimes only aware that you are in receipt of a pension when you disclose it on your tax return in the following calendar year.
- You had an Estimated Assessment
- Estimated assessments are sometimes issued to collect additional tax on income that does not have tax deducted before it is paid to you. An example of this is if you are in business. If you receive an assessment which includes an estimated business profit, for example, you will pay the tax due based on those figures, however, when your final accounts are prepared the amount of taxable business profit may differ. This may result in additional tax being payable on your account.
- You changed jobs part way through the year
- If you change jobs part way through the year you may still get paid from your old employer after you have left, thereby receiving wages from both your old employer and your new employer in the same month. The allowances that are included in your coding notice will have been used by both employers which will result in an underpayment of tax.
- How do I pay my tax, what options do I have?
- If you are employed your employer will take tax from your wages each week or month and send it into us each quarter which is credited to your account.
- If you have tax to pay in addition to the deductions made by your employer, for example if you have a pension or some investment income that does not have tax deducted before it is paid to you, then you can make a payment online by following this link, you will need your tax reference number to pay online (your reference can be found on all correspondences from Income Tax).
Interim assessment suspension process
- What is an interim assessment?
- An interim assessment is issued to collect tax for the current year if you have income that does not have tax deducted at source, e.g. business income, rental income, bank interest, old age pensions, etc.
- An interim assessment is based either on figures provided by you, for the previous year, or they have been estimated.
- I don't agree with my interim assessment, what do I do?
- You can't appeal against an interim or an interim (estimated) assessment although you can request that tax is suspended if you think the assessment is too high.
- How do I ask for tax to be suspended?
- You can complete a 'Request for suspension of tax' form Form 690(c) [240kb]. If possible you should use this form, which will enable us to suspend the right amount of tax. If you write or email, please make sure you include the reasons why you believe the tax charged is too high. You will also need to tell us the amount you think you need to pay.
- You should make your recommended payment by the due dates, as shown on the statement of account attached to the relevant notice of assessment. We will not pursue the remaining balance while this appeal is ongoing.
- Will I be told if you agree to my request?
- No, we will contact you if your request cannot be accepted with the reasons why. If you are unhappy with this decision you can appeal.
- Will I receive a revised assessment?
- No, the interim assessment will only be revised when your completed income tax return for the relevant calendar year has been processed.
Appealing against a final assessment if I have submitted a tax return
- An appeal allows you to notify the Director that you don't agree with your final assessment and the reasons why.
- You can't appeal against an Interim or an Interim (Estimated) assessment although you can request tax is suspended (see FAQ above).
- When should I appeal?
- A final assessment includes figures you have submitted on your income tax return, or the amounts that have been given to us by a third party, such as your employer or pension provider. If you disagree with the figures in the assessment you should send in an appeal.
- How do I appeal?
- An appeal must be submitted, in writing, within 30 days of the date on the assessment. If possible you should use the Appeal Form Form 690(a) [241kb] which will enable us to process your appeal. See Appeals form guidance [153kb] for some help on how to complete the form.
- If you write in or email please make sure it is clearly marked "Appeal" and that you include the reasons why you disagree with the figures in the assessment. You will also need to tell us how much you think you need to pay.
- Do I need to make a payment if I have appealed?
- Yes, you will need to make a payment based on your calculations as outlined in your appeal (e.g. form/letter/email). This amount should be paid by the date shown on your statement. We will not pursue the remaining balance while this appeal is ongoing.
- Will I know if you have received my appeal?
- If you provide your email address your appeal will be confirmed.
- We will also contact you if your appeal cannot be accepted with the reasons why.
- What happens next?
- Either a revised assessment will be issued or we will contact you explaining the reasons why your appeal cannot be accepted. If you are unhappy with this decision you may ask for the appeal to be heard before the Guernsey Tax Tribunal, which is an independent appeal body set up to hear income tax appeals that can't be resolved.
How is my tax calculated?
- In simple terms, when you complete your annual income tax return the figures you declare are offset against your personal allowances and the balance is taxed at 20%.
- Details of the basic personal allowances are available here under "Rates and Allowances". For example, if you are a single person, you can earn £9,675 in 2016 before you pay tax.
How does my employer know what tax to take from my wages?
- At the beginning of each year, or when you commence employment, your employer will be sent a Coding Notice which will tell them how much allowance they should deduct from your gross wages, they then tax the balance at 20%.
Why do I have to pay tax?
- Everybody has to pay income tax as it helps to support and develop the infrastructure of our island, without which the essential services that we all use would not function.
I am recently bereaved, what do I need to do?
- If someone dies you should make contact with us as soon as you can so we can ensure any enquiries we have can be put on hold until such a time as you are able to deal with them. A letter is sent out usually 12 weeks after death asking for the relevant details that are required to finalise their income tax affairs. We will provide you with support during this difficult time and should there be any problems with obtaining the information required please let us know as soon as possible.
- What information do I need to provide?
- You will need to provide details of their income from 1 January to the date of death so that a final assessment can be issued in order for the final liability to be known. A letter will be sent to the personal representative of the estate advising of the final amount of tax to either be paid or repaid to the estate. Once the balance at the account has been cleared the case will be closed.
- What are my requirements following a death?
- If your spouse dies you will need to let us know who the main beneficiaries of their estate are and the details of the income that has arisen or accrued from 1 January to their date of death. A final assessment will be issued and the surviving spouse will be required to submit an income tax return in the following year declaring their income from their spouses' date of death until the end of the year. In the year following the spouses' death there will be a requirement to complete a return annually unless you have been advised otherwise by us.
- If a parent dies you will need to let us know who the main beneficiaries of their estate are and the details of the income that has arisen or accrued from 1 January to their date of death. A final assessment will be issued and the surviving parent will be required to submit an income tax return declaring their income for the whole of the calendar year. This will be a requirement unless you have been advised otherwise by us.
- If you are the personal representative of the estates of a single person you will need to let us know who the main beneficiaries of their estate are and the details of the income that has arisen or accrued from 1 January their date of death. A final assessment will be issued advising you of the final liability of the individual and once the tax due has been paid or the repayment has been issued the case will be closed. In order for a repayment to be issued to the estate a copy of the will/probate to evidence who the legal executor of the estate will be required.
Why am I receiving less than the full allowances?
- What does 'pro-rating of personal allowances' mean?
- If you permanently arrive and depart from Guernsey your personal tax allowances will be based on the number of weeks you spent in Guernsey in the year in which your arrive and the year in which you permanently depart.
- What does 'permanently depart' mean?
- A permanent departure from Guernsey means that you have made a decision to leave and set up home elsewhere.
- What if I return to Guernsey in the same calendar year?
- If you come back to Guernsey in the same year as you left you will not be treated as if you left permanently.
- What if I leave Guernsey and return in the following year on a regular basis?
- If you leave Guernsey and come back each year you will be treated as though your departure from Guernsey was permanent.
- What if I take a long holiday abroad but keep my home in Guernsey?
- if you take a long holiday each year but return to your home in Guernsey you will be treated as though your departure from Guernsey is not permanent
I have a complaint, how do I tell you about it?