Taxes Are Going Up

Islanders are facing a tax hike as Treasury Minister Dr Alex Allinson announced the first increase in 14 years.

The top rate of income tax will rise from 20% to 22%, with median earners set to be just under £200 a year worse off.

Announcing the increase, Dr Allinson said that the 2% would be ‘ring fenced’ to help pay for the island’s healthcare services.

Alongside this increase, the rate of income tax on taxable income for non-resident individuals and non-corporate entities will also increase from 20% to 22%.

While a forthcoming tax strategy proposes the creation of a standalone annual NHS levy, which would aim to replace the tax increase and also apply to those residents who do not pay income tax in the Isle of Man.

A tax rate increase from 10% to 15% for certain banking businesses and large retailers will be introduced in respect of the 2024/25 tax year only. The 15% rate will only apply to banks and retailers whose profits would otherwise be subject to a top-up tax outside the Island under the OECD’s Pillar 2 Global Minimum Tax initiative.

Meanwhile, the income tax personal allowance will remain at £14,500 for a resident individual and £29,000 for a jointly assessed couple.

The Treasury Minister said: ‘Although our income tax receipts have been strong and are currently forecast to be in excess of £320 million, there still remains a gap in healthcare funding which must be addressed now and for the future.

‘After exploring my options for a balanced budget, I have made the decision to increase the higher rate of income tax from 20% to 22% and ring-fence this extra income to support our NHS.

‘I intend to lead a debate on [the Tax Strategy] next month and work with Members to investigate bringing forward a new “NHS levy” which could then replace this increase in the upper rate of Income Tax and lead to a fairer way that all those in our community could help fund the healthcare system they rely on.

‘It is my ambition to introduce the levy from the 2025-26 income tax year and therefore the necessary legislation will need to be brought forward prior to this.’

What This Means

The gov’s figures say that for a single person earning the minimum wage, they can expect to be £85.80 better off for the year, though it isn’t clear how.

A single person earning a median wage, which is £34,996, they will be £194.12 worse off, while a single person earning £48,000 would be £761.40 worse off and anyone singly assessed person earning £130,000 will be £2,769 worse off.

Jointly assessed couples earning £80,000 will be £588.40 worse off and those earning £208,000 will be £3,998 worse off.

A Different Time

The last time income tax was raised, Tony Brown was chief minister,