Isle Of Man Budget Extends Zero Tax Regime

by Jason Gorringe, for LawAndTax-News.com, London

16 February 2005

The Isle of Man's Treasury Minister, Allan Bell MHK on Tuesday delivered his 2005 Budget, announcing a zero rate of income tax for six more sectors of the Island's economy - manufacturing, film, e-gaming, tourist accommodation, agriculture and fishing.

Mr Bell confirmed that the Island - which already has the zero rate for insurance, fund management, space and satellite technology and shipping - will introduce it as a standard for business in April 2006.

Explaining the reasoning behind the move, the Treasury Minister stated that:

"The Isle of Man is an international business and finance centre with a diverse, dynamic economy. We believe in encouraging enterprise to generate jobs and income for our community. We want business to blossom on the Island."

" We are known internationally as one of the most business-friendly places in the world. Now we are building on that reputation by extending the zero rate of income tax to six more sectors of our economy."

For trading companies outside the zero rate regime, Mr Bell revealed on Tuesday that the lower income tax rate will stay at 10%, with the threshold at which the standard rate of 15% becomes payable remaining at £100 million. A higher rate of 18% will remain for all other company income. For individuals, the standard income tax rate will stay at 10%, with the higher rate remaining at 18%.

Other key measures contained in the 2005 Budget included:

• The creation of a £2m Marketing Initiatives Fund to encourage proposals for the development of the economy.
• Personal Allowances increased by 3.3% to £8,500 for a single person and £17,000 for married couples, taking 700 people out of tax based on their latest available tax-returns.
• Income Tax threshold at which the higher rate for individuals becomes payable increased by 3% to £10,300.
• An increase of £34.5 million or 7.7% in net Departmental revenue spending on public services, including £16.1 million more for Health and Social Security and £5.7 million more for Education.
• An increase of 12.4% in the Personal Allowance tax credit for people on low incomes, providing payments of up to £250.
• An undertaking to review the taxation of high net worth individuals, with the intention of capping their personal tax liabilities, in order to encourage further business opportunities into the Island.

The full text of the Isle of Man's 2005 Budget Report can be found in the Tax News Resources section

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