With Isle of Man tax returns for the 2018/19 tax year having now been issued, Alison Quayle from Equiom Tax Services outlines some of the key matters you should consider when completing your tax return.
As someone who has more than 25 years of experience in filling out often complex tax returns for local residents, I know that the process is not always straightforward. Here are some important facts about reporting income to help you prepare your Isle of Man tax return ahead of the 6 October deadline.
- An Isle of Man resident taxpayer must include their total worldwide income on their Isle of Man tax return.
- Failure to declare all income correctly may result in interest and penalty charges when any omissions come to light.
- Under the terms of the exchange of information agreements currently in place, the Isle of Man Government receives details of many types of income received by Isle of Man taxpayers from Isle of Man entities and from many other countries – including the UK, Jersey, Guernsey, Ireland, the USA and much of Europe. These details are cross referenced to individual records in order to identify omissions.
- A change in circumstances – such as your departure from the Island, marriage or your partner’s death - must be notified to the Treasury and may require submission of a tax return within six months of the date of the trigger event.
- UK investment products, such as Personal Equity Plans (PEPs) and Individual Savings Accounts (ISAs), whilst not liable to tax in the UK, are subject to income tax in the Isle of Man.
- ‘Tax free’ lump sums received from UK pensions may not be tax free in the Isle of Man.
- Full details of income and expenditure arising from self-employment or rentals must be included in your Isle of Man tax return even where the net result may be a loss.
- Income (but not capital) arising during the administration of an estate and received as part of a legacy must be declared in full on your Isle of Man tax return.
- An Isle of Man resident who is in receipt of UK income – such as pensions or interest - may find that UK tax is deducted from their payments before they receive them and this may be incorrect.
- Tax relief may be available to Isle of Man resident taxpayers for mortgage or loan interest paid to an Isle of Man lender.
- Tax relief may also be available for nursing expenses paid by you in respect of yourself or a close relative.
- Charitable donations in excess of £100 per charity in a year, or made via a charitable deed of covenant, may give rise to tax relief.
I would also like to make you aware that, following changes in UK legislation in recent years, if you are an Isle of Man resident who owns UK residential or commercial property (either personally or through an Isle of Man company or structure), the ownership and/or sale of such property could give rise to tax implications and there are strict deadlines for notifying authorities of such liabilities. Responsibility for this lies with the owner of the property and substantial penalties will arise as a result of any delay or failure to notify.
For more information or to discuss any concerns related to your Isle of Man tax return, contact Alison Quayle.
This article has been carefully prepared, but it has been written in general terms and should be seen as broad guidance only. The article cannot be relied upon to cover specific situations and you should not act, or refrain from acting, upon the information contained therein 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.