Tax Matters 2020/21

A guide to Isle of Man taxes

Tax rates for the year 2020 - 2021

Income Tax

Allowances	2020/21 (£)	2019/20 (£)
Single Person	14,250	14,000
Married couple (combined)	28,500	28,000
Blind person’s addition	2,900	2,900
Single parent’s addition	6,400	6,400
Disabled person’s addition	2,900	2,900
Co-habiting couple’s addition	6,400	6,400
Aged addition	Nil	Nil
Non-resident’s personal allowance	Nil	Nil

Reliefs	2020/21 (£)	2019/20 (£)
Interest paid to Manx residents lenders (maximum)*	5,000	5,000
Covenanted educational payments*	5,500	5,500
Charitable donations*	7,000	7,000
Charitable donations by a company	15,000	15,000
Nursing expenses*	12,500	12,500

_{* Tax relief is restricted to 10% of the amount paid and in respect of educational deeds of covenant is restricted to payments made under covenants that have been entered into on or before 5 April 2011 and where the student is in qualifying full time education at that date.}

Rates

Individuals	Rate (%)	2020/21 (£)	2019/20 (£)
Single person*	10	Up to 6,500	Up to 6,500
	20	Above 6,500	Above 6,500
Married couple*	10	Up to 13,000	Up to 13,000
	20	Above 13,000	Above 13,000
Non resident	20	All	All

^{* Subject to an irrevocable election being made no later than 5 April 2020, a Manx resident’s tax liability will be fixed at £200,000 (or £400,000 for a married couple) for the five years commencing on 6 April 2020.}

Companies	2020/21 Rate (%)	2019/20 Rate (%)
Banking business	0/10	0/10
Income from IoM land & property	20	20
Retail business*	0/10	0/10
Other	0	0

_{* Retail businesses with taxable profits of over £500,000 are subject to tax at 10%, those with taxable profits below that level are subject to tax at 0%.}

Benefits in Kind

Car benefit - 2020/21	Car Rate (£)	Fuel Rate (£)
Cylinder capacity Electric cars (regardless of capacity)	Nil	Nil
1,000 or less	800	800
1,001 - 1,200	1,100	950
1,201 - 1,800	3,600	1,500
1,801 - 2,500	5,000	1,750
2,501 - 3,500	7,000	2,000
3,501 - 5,000	10,000	2,250
More than 5,000	12,000	2,500

_{Note: These rates are unchanged from 2019/20.}

Other Taxable benefits	Taxable amount
Accommodation	Cash equivalent
Use of an asset	20% of market value (or cost to employer if higher)
Other	Cost to employer

Chargeable benefits with an aggregate value of under £600 for the year are exempt from tax.

Exempt Benefits

Accommodation used solely for duties of employment.
Approved Profit Sharing or Savings Related Share Options Schemes.
Car Parking space at or near place of work.
Medical/dental insurance.
Christmas party expenses up to £100 per head.
Provision of a personal computer for use at home up to benefit value of £1,000.
Nursery or creche facility expenses necessary for employees to attend work.
Bicycle and related safety equipment provided under a cycle to work scheme up to an annual maximum value of £1,200.

Personal Pensions and Retirement Annuities

Flexible pension options exist via either of two common types of IoM scheme, being a Self-Invested Personal Pension (SIPP) and a new type of scheme, the Pension Freedom Scheme (PFS). A comparison of the key features of the two types of scheme is below:

	Current Schemes	Pension Freedom Schemes
Maximum contribution - Pre 6 April 2018 Post 5 April 2018	£300,000 £50,000	N/A £50,000
Minimum age for receiving benefits	50 or 55	55
Tax free lump sum	Up to 30%	Up to 40%
Tax treatment of payments in excess of the tax free lump sum	ITIP (with treaty relief if applicable)*	ITIP (with treaty relief if applicable)
Transfers from current IoM scheme to a PFS	10% charge withheld at source from transfers out of the PFS	10% charge withheld at source from transfers into the PFS
Amount charged on residue paid out on death	7.5% if scheme is not drawn down	Nil

_{*Income restricted based on published limits}

Capital Allowances

Rates 2020/21 and 2019/20	Rate (%)
Plant & Machinery - first year allowance writing down allowance	100 25
Industrial Buildings & Structures - first year allowance writing down allowance	100 4
Agricultural Buildings - first year allowance writing down allowance	100 10
Tourist Premises - first year allowance writing down allowance	100 10

_{For a motor car a first year allowance/writing down allowance of 25% may be claimed each year up to a maximum of £3,000 per annum.}

Value Added Tax

Standard rate 20%
Lower rates of 0% or 5% apply in certain circumstances.
Registration threshold from 1 April 2020 £85,000 (2019 - £85,000) and will remain at £85,000 for 2 years from 1 April 2020.

There are no inheritance, wealth, gift, death, capital gains or insurance premium taxes or stamp duties in the Isle of Man.

National Insurance Contributions*

Class 1: Employee **		(%)
2020/21
Earnings bracket (weekly) up to £138		Nil
£138.01 to £823		11
over £823		1
2019/20
Earnings bracket (weekly) up to £125		Nil
£125.01 to £784		11
over £784		1

Class 1: Employer **		2020/21 (%)
Earnings bracket (weekly) up to £138		Nil
over £138		12.8

Classes 2 and 3	2020/21 (£)	2019/20 (£)
Class 2 (self employed flat rate)
Per week	5.40	5.40
Small earnings exception (year)	7,176	6,500
Class 3 (voluntary)
Per week	15.30	15.00

Class 4 (self employed)		(%)
2020/21
up to £7,176		0
£7,176.01 to £42,796		8
over £42,796		1
2019/20
up to £6,500		0
£6,500.01 to £40,768		8
over £40,768		1

_{* Standard rates are shown. These figures may alter if an employee elects to contract out.}

_{** Class 1A and 1B contributions are not charged in the Isle of Man.}

National Insurance Holiday Scheme:

From 6 April 2019 certain new residents and returning students will be able to apply for a refund of the Class 1 NIC's paid as employees during the first 12 months of their employment here. This scheme is to continue for a further year starting 6 April 2020 (finishing 5 April 2021).

Company fees and duties

	(£)
Incorporation fees
Standard - within 48 hours	100
2 hour incorporation	250
While you wait incorporation	500
Annual filing fees*
Standard	380
Excepted companies and LLC’s	95