On 19 February 2013 Treasury Minister Eddie Teare delivered his 2013/14 budget for the Island. Minister Teare delivered a budget based on fairness and a “steady as we go” ethos which predicts the Government to be on course to rebalance finances by 2015/16. Use of Government reserves in current year is projected to be £47m instead of £55m.
As many readers will be aware, the Government has been in negotiations with US and UK Governments in relation to the Foreign Account Tax Compliance Act (FATCA) and Minister Teare confirmed in his budget speech that discussions were progressing well and that a FATCA agreement is expected to be signed in the near future with the US.
In terms of a UK/IoM FATCA style agreement, it was confirmed that after 3 months of intensive negotiations with the UK, a FATCA agreement has now been reached between the UK and the IoM which is expected to be put in place shortly. Crucially for the IoM, it has been confirmed that individuals who are UK resident, but non domiciled there, will be subject to an alternative reporting regime under the agreement.
The Treasury Minister further announced a bespoke IoM Disclosure Facility, which will become effective from 6 April 2013. The facility is available to anyone who wishes to put their UK tax affairs in order, that is, to tell the truth about previously undeclared overseas income and capital gains. Those wishing to avail themselves of the facility will be able to do so until 30 September 2016 and is applicable to taxpayers with “relevant property”, that is bank accounts, companies, trusts etc in the IoM (so long as assets are held before 31 December 2013).
In the interests of fairness, Minister Teare announced that retailers with profits over £500,000 per annum will be subject to corporate income tax of 10%. The Government expects that this new tax will generate £3.5 million in additional tax revenue.
From a personal income tax perspective there has been no change to income tax rates, personal allowances or thresholds.