Isle Of Man Mulls Income Tax Cap For Top Earners

by Jason Gorringe, Tax-News.com, London

06 July 2005

The Isle of Man government may make a decision this month on whether to place a cap on the amount of income tax paid by the island's high-earning residents.

According to a report in the Daily Telegraph, Dr Malcolm Crouch, the Island's senior revenues officer, revealed that the government wants to take a quick decision on the proposal, which was first mooted in the 2005 Budget, so that any necessary changes of legislation can be in place by April 2006.

According to calculations by the Isle of Man's Treasury Department, an income tax cap at £100,000 would benefit those whose annual earnings were £570,000 per year or more. A cap of £200,000 would only benefit those earning £1.25 million per year in taxable income. At present, the island's top rate of tax is charged at 18%.

"We hope to make a decision this month so we can bring in the cap from the next tax year starting April 2006," stated Dr Couch.

In his Budget announcement in February, Manx Treasury Minister Alan Bell unveiled a zero rate of income tax for six more sectors of the Island's economy, including manufacturing, film, e-gaming, tourist accommodation, agriculture and fishing.

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.

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