Relocation, Relocation, Relocation

With its competitive tax rates for individuals and businesses, the Isle of Man offers more than just stunning natural beauty, outdoor adventure, and a rich cultural heritage. 

Why choose the Isle of Man?

Tax changes announced in the recent UK budget, combined with a trend towards global mobility and a greater focus on achieving a better work-life balance are prompting many individuals to reconsider where they want to live. The Isle of Man is increasingly recognised as an attractive destination for relocation. In addition to significant tax benefits, residents enjoy numerous lifestyle advantages including a low crime rate, an unrestricted housing market, well-regarded private and public schools, and excellent connectivity to the UK.

Personal tax matters: a closer look

A standout feature of the local tax regime is the absence of both Capital Gains Tax (CGT) and Inheritance Tax (IHT). Recent UK budget changes have expanded the scope of these taxes, raising concerns for many UK residents.

For income tax purposes, there is a tax-free personal allowance of £14,500 for residents, which tapers to nil once taxable income reaches £129,000. There is a lower rate of income tax of 10% on the first £6,500 of taxable income, before the highest rate of tax, at just 22% applies.

For those with significant taxable income, a tax cap election can be made. This election secures an individual’s tax liability at £200,000 per annum, for a minimum period of 5 years, providing certainty for the taxpayer.

To avail of the attractive tax regime an individual must establish Isle of Man tax residency. Compared to the UK’s complex Statutory Residence Test (‘SRT’), it is relatively easy to obtain and maintain Isle of Man residence status with residency primarily based on physical movement with a “view or intent of establishing residence”.

Tax advantages for businesses

Entrepreneurs and business owners relocating to the Isle of Man could benefit from the Island’s 0% rate of corporate income tax. Further, as for individuals, there is no capital gains tax for tax resident corporate entities. The relocation of a company can be complex, particularly from a UK tax perspective, and it is important to bear in mind that exit charges may apply where a company ceases to be UK tax resident.

Additional incentives for new residents and businesses

There are further tax benefits for start-ups and expanding businesses in the Isle of Man, most notably:

• Special Treatment of Key Employees – this restricts a new resident’s exposure to Isle of Man income tax for their first three tax years of residence
• Relocation relief for certain expenses incurred by employers on behalf of their employees when relocating; and
• A National Insurance Holiday Scheme for employees, offering a refund of the first year’s Class 1 contributions

Ready to make the move? Speak to Equiom

The Isle of Man combines a competitive tax regime with a high quality of life, making it an attractive choice for individuals and businesses considering relocation. Seeking professional tax advice is essential to ensure a smooth transition into the Isle of Man tax system and to address any UK exit matters.

For over 45 years, Equiom has supported international corporations, high net worth individuals, and families worldwide with their fiduciary and related business support needs.

Our multi-jurisdictional Tax Compliance and Advisory Services are designed to support your business in managing its tax obligations robustly. By partnering with us, you can rely on technical experts committed to ensuring your tax strategies are both tax optimum and compliant as needs evolve and tax landscapes change.

If you are considering relocating to the Isle of Man and need guidance and support tailored to your specific needs please contact our tax specialists Kevin Cowley and Amanda Reid: AmandaReid@equiomgroup.com.

This article has been carefully prepared, but it has been written in general terms and should be seen as broad guidance only. This article cannot be relied upon to cover specific situations, and you should not act, or refrain from acting, upon the information contained within this article without obtaining specific professional advice. Please contact Equiom to discuss these matters in the context of your particular circumstance. Equiom Group, its partners, employees, and agents do not accept or assume any liability or duty of care for any loss arising from any action taken or not taken by anyone in reliance on the information in this article or for any decision based on it.