Island attraction
Spring 2007
Many of you may already have read articles in the press on the
Isle of Man and the latest steps the Government is taking to
attract a new generation of economically active entrepreneurs to
the Island. As a result, a package of measures to stimulate
the inflow of investment and business to the Island were
announced.
A key component of these changes is the
introduction of a 0% corporate tax as standard. The new zero rate
tax strategy has been implemented ahead of other UK Crown
Dependencies and aims to provide a consistent treatment across all
sectors of the economy as part of the Island’s commitment to a
diversified economy. The Treasury anticipates this new
incentive, coupled with the Island’s state of the art
communications, business infrastructure and general high quality of
life, will prove a powerful attraction to entrepreneurs.
The Island also offers a very strong
proposition for high net worth individuals, with a particularly
generous set of personal tax allowances, including a cap on
personal income tax at a maximum level of £100,000 per annum,
irrespective of earnings. The Island’s commitment to personal
wealth creation is also reflected in the fact it has no capital
gains or inheritance taxes, and no intention of introducing them.
The highest rate of tax is currently just 18% and applies above an
individual income threshold of £19,170 or £38,340 for a
married couple.
To illustrate the financial benefits of Island
living, a married couple with an income of £570,000 or over would
have a maximum tax liability of £100,000 on the Island, whilst in
the UK a couple with this level of income would face a tax
liability of approximately £220,000. In addition, unlike the UK,
the Income Tax Division still allows for locally paid mortgage and
loan interest to be claimed as a tax deduction at the
individual’s highest rate of tax, up to a limit of £15,000 per
person (£30,000 per couple) per annum from April 2008.
By creating a tax system that is easy to
understand and available to all, the Treasury Minister is seeking
to provide a competitive advantage for the Island and to
consolidate its reputation as a quality business centre of
international standing. The Island already boasts one of the
most successful economies in Europe, and is currently into its 24th
year of unbroken growth.
The Island’s continuing success is dependent
on sustaining this diverse economy and the Government’s latest
innovative measures are designed specifically to attract new
businesses and investment.