Jersey has published the Finance (2021 Budget) (Jersey) Law 2021, which was registered by the Royal Court (enacted) on 30 April 2021. As previously reported when the Budget Law was adopted by the States Assembly in December 2020, the articles and measures of the law regarding income tax are as follows:
Article 1 – Sets the standard rate of income tax for 2021 at 20%.
Article 2 – Standard interpretation article stating that Part 1 of the Budget Law amends the Income Tax (Jersey) Law 1961.
Article 3 – Extends the JEP 50 monthly penalty for late delivery of a return to foundations. Furthermore, where the tax liability of a person, other than a corporate body, is less than JEP 50 then the late filing penalty for each month is abated to the amount of the tax liability.
Article 4 – Inserts 2 new Articles in order to put onto a statutory footing the existing practices. Article 70C will allow a person with income from a foreign trade to deduct as an expense the foreign tax they pay in respect of that trade provided no relief for double taxation or unilateral relief has been given. Article 70D will allow an employer to deduct as an expense of the trade the contributions they pay into a group life insurance scheme.
Article 5 – Clarifies that a dividend received out of the capital profits of a foreign company is not chargeable to tax.
Article 6 – Provides for the increases to the personal income tax exemption thresholds proposed in the Government Plan, including an increase in the standard tax exemption threshold from JEP 15,900 to JEP 16,000 for single persons and from JEP 25,550 to JEP 25,700 for married couples / civil partnerships.
Article 7, 8, and 9 – Increases the income disregard applying to childcare, as well as related amendments. The disregard is set to correspond with the second earner's allowance as proposed in the Government Plan.
Article 10 – Places on a statutory footing the existing practice whereby the standard annual allowance for the cost of providing plant or machinery acquired by a trader for the purpose of the trade is proportionally increased where the basis period on which an assessment is calculated is greater than 12 months.
Article 11– Places on a statutory footing the existing practice where the plant or machinery from a trade is transferred from a predecessor to the successor. The successor may include in the calculation of their annual allowance the net qualifying expenditure of the predecessor after deducting the annual allowance of the predecessor.
Article 12 – Places on a statutory footing the existing practice of allowing a trader to claim loss relief in respect of the annual capital allowance for the purchase of plant or machinery of the trade.
Article 13 – Adds Clos de Paradis Housing Trust to the list of social housing providers who are exempt from income tax.
Articles 14 and 15 – Enables the Comptroller to provide information collected for the purpose of income tax, for the year of assessment 2021 and subsequent years, in respect of one spouse/civil partner to the other spouse/civil partner.
Article 16 – Aligns the deadline for making an election in respect of exemptions from tax for lump sums paid out of overseas pension schemes to the deadline for the personal electronic tax return.
Article 17– Changes the procedure for raising an assessment on the withdrawal of approval of a pension scheme following a breach of the rules. Where a breach of the rules has occurred, the Comptroller may raise an assessment and abate the rate of tax to be applied. The amount of the abatement will now be determined at the time the assessment is raised. The person may then appeal the assessment and/or the abatement in the normal way.
Article 18 – Allows the States to bring forward a scheme for the taxation of companies within the cannabis industry by Regulations.
Article 19 – Allows the service of a notice by delivery through any means of electronic communication which would include through an online account.
As enacted, the entry into force date of the 2021 Budget Law is 1 January 2021.