Jersey (Channel Islands) Budget for 2012
The Draft Finance (2012 Budget) (Jersey) Law 201- had its third reading in the States Assembly, Jersey’s legislature, on 8 November 2011. The draft Finance Law embodies measures contained on the draft 2012 Budget Statement which was issued on 23 September 2011.
Some of the measures potentially impacting individuals are highlighted below.
Income Tax Exemption Thresholds and Allowances
| The tax exemption thresholds will be increased by 4.5 percent in line with the annual increase in inflation for the year to June 2011 and tax allowances will be retained. Personal allowances deducted at the 20% standard rate | |
| Additional personal allowance (sometimes referred to as single parent allowance) (see note 1 below) | £4,500 |
| Child allowance Restricted by reference to the excess of child’s income over £3,000 (see note 3) | £3,000 £1 for £1 |
| Higher child allowance (see note 2) Restricted by reference to the excess of child’s income over £3,000 (see note 3) Note: For 2009 and future years a child’s earnings after completion of a course in full-time higher education, in that year, will be disregarded. | £6,000 £3 for £2 |
Source (for all 3 tables): http://www.gov.je/TaxesMoney/IncomeTax/Individuals/AllowancesReliefs/Pages/AllowancesReliefs2012.aspx
| Exemption thresholds deducted using the marginal relief 27% calculation of tax | |
| Single | £13,370 |
| Married | £21,440 |
| Single (aged 63 or over for the whole of the year) | £14,920 |
| Married (aged 63 or over for the whole of the year) | £24,540 |
| Additions to exemption thresholds | |
| Wife working | £4,500 |
| Child (see note 3) | £3,000 |
| Child in further education (see notes 2 and 3) | £6,000 |
| Single parent (see note 1) | £4,500 |
| Child-care tax relief | £6,150 (max) |
| Enhanced child-care tax relief (pre-school age children) | £12,000 (max) |
Notes:
1) Additional personal (single parent) allowance is only due if the claimant:
• is not entitled to the married exemption threshold (i.e., a single parent) or if the claimant’s spouse is totally incapacitated by physical or mental infirmity and;
• is entitled to child allowance
2) A child who is over 17 years of age receiving full-time higher education. Higher education has the same meaning as in the Education (Jersey) Law 1999. Generally this means a university degree, however, other tertiary courses are accepted, for example a foundation degree or attending a recognized nurses training college. If you are not sure if the higher allowance is due please contact your tax adviser with details of the course your child is attending and a prospectus of the college.
3) If a child has income in his or her own right, the amount must be included with the claim for child allowance. Once a child earns more than £3,000 in the year, the child allowance will be restricted on a £1-for-£1 basis if child allowance is claimed, and £3 for every £2 if higher child allowance is claimed. For example, a child at school has earnings of £4,000, child allowance of £3,000 will be reduced to £2,000. The higher allowance for a child at university on the same income will be reduced from £6,000 to £4,500.
Payments on Termination of Employment
The government has introduced a measure under which payments on the termination of employment (whether statutory, contractual, or voluntary) will be brought within the charge to tax. Also, the measure provides for an exemption for redundancy payments of up to £50,000. Where the payment is in respect of termination occasioned by injury, death, or disability, the £50,000 ceiling is no longer applicable.
Restrictions on Relief for Contributions to Occupational Pension Schemes
| A measure has been introduced in the legislation that will restrict the amount of relief that may be claimed by high-income earners (employees with earned income exceeding £150,000) for contributions to occupational pension schemes. Retirement Annuity Relief |
| The combined total paid into all pension schemes in the year of assessment whichever is the lower of: 1. £50,000 2. an individual’s related earnings during the year of assessment. One pound of this relief is withdrawn for every one pound of income above £150,000 an individual earns. |
In the case of a married couple, each spouse will have his/her own £150,000 limit.
Other
Measures have been introduced to support working parents by providing significantly more generous tax relief for child-care costs.
Source: KPMG