Mediaboss Marketing

23 February 2012

The Isle of Man government has announced its 2012/13 Budget, containing several tax measures as part of a rapid consolidation plan aimed at eradicating the territory's debt in the near-term.

Under the Budget, the island's income tax regime in terms of rates and thresholds remains unchanged. The Personal Allowance Credit, an annual payment for those on low incomes, however has been reduced marginally, by GBP200, per eligible taxpayer.

In addition, the National Insurance Employees' primary threshold is to be increased by GBP3 per week, while the upper earnings limit will be increased by GBP20 per week.

The government has also announced a National Insurance Rebate scheme to encourage firms to increase employment. From April 6, 2012, an employer will be able to apply to the Assessor of Income Tax for exemption from having to pay the secondary National Insurance Contributions where certain conditions are met, namely: the employment must be for an employee that has not been connected to the entity in the last two years; employment must last at least twelve months and be for at least 30 hours a week; and staffing levels must exceed that in the previous year. Employers must also be up to date in terms of payment of the payment of Income Tax Instalment Payments and National Insurance Contributions. The scheme is to run for a period of two years.

In addition, following consultation in 2010, the use of Online Tax Services for employers is to be introduced on a transitional basis from April 6, 2012. Employers with more than 100 employees will be required to use the system from April 6, 2012. The first annual online return, for the year ending April 5, 2012, will be due by May 5, 2013. Employers with 10 or more employees will be included from April 6, 2013, and compulsory online filing will be made mandatory for all employers from April 6, 2014.

Tax relief on mortgage and loan interest is to be restricted to the lower tax rate of 10%. Tax relief on maintenance payments is to be abolished, and maintenance received will no longer be classed as taxable income.

The Budget also commits to comprehensive retrenchment across government departments. The government reported that it had already achieved savings worth GBP12m to add to the GBP51m in savings made since 2010-11. Government expenditure will be GBP35m lower than in last year's budget.

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Isle Of Man Announces 2012/13 Budget