Draft Income Tax (Amendment - Stage 2 of Independent Taxation) (Jersey) Law 202-

Scrutiny review - Corporate Services Panel

Launch date: 09/06/2023

Review status: Review started

What is the review about?

The Corporate Services Scrutiny Panel (hereafter "the Panel") is seeking views on the Draft Income Tax (Amendment – Stage 2 of Independent Taxation) (Jersey) Law 202, P.41/2023 (hereafter "the Proposition"). The Proposition was lodged by the Minister for Treasury and Resources on 5th June 2023 for earliest debate in the States Assembly on 18th July 2023. If adopted, the changes will conclude the final stage of the process to introduce mandatory Independent Taxation in order to reform Jersey's taxation system.

Stage 1 Independent Taxation

The Scrutiny Panel that served from 2018 – 2022 (hereafter "the previous Panel") reviewed and presented Comments on the Draft Income Tax (Amendment – Stage 1 of Independent Taxation) (Jersey) Law 202, P.78/2021 - the first stage of proposed changes to the Income Tax (Jersey) Law 1961, which was adopted by the States Assembly in September 2021. The adoption of P.78/2021 commenced the introduction of the Independent Taxation process in two phases including:

  • Phase one - provided Independent Taxation for the year of assessment 2021 for married couples and civil partners, when specified conditions were met.
  • Phase two - allowed existing couples to voluntarily elect for Independent Taxation for the year of assessment 2022.

Stage 2 Independent Taxation

The Proposition details the final proposals to complete the process in order to move away from a taxation system in Jersey where couples are taxed differently according to their marital status.

It is recognised that the proposed changes will impact couples differently based on their income and the proportion of the income proportioned to each partner. The Proposition notes, while there would be no financial impact for most couples, that approximately 6,400 couples would see their tax liability increase with a direct switch over to Independent Taxation. This would arise in circumstances where one partner has an income below the single person's income tax threshold (£18,550 for 2023). As such, a compensatory allowance is being proposed, which aims to ensure, for at least ten years, through the provision of equitable relief that no one will experience negative financial impact as a result of Independent Taxation.

Should the Proposition be adopted by the States Assembly, mandatory Independent Taxation will be introduced for all couples from the year of assessment 2025 and the Income Tax (Jersey) Law 1961 will recognise Independent Taxation as the default position, with a Schedule to maintain married couples' taxation for the year of assessment 2024.

Review progress

The Panel is considering the submissions it has received to help inform its Comments on the Proposition. On 5th July 2023, the States Assembly debated Deputy Farnham's Proposition - P.32/2023 for the compulsory element of independent taxation for existing married couples and civil partners to be removed. As a result, Part B of the Proposition was adopted by the Assembly, which requests the Minister for Treasury and Resources to take the necessary steps to ensure that joint taxation remains available for any such married couples and civil partners. Therefore, the Minister for Treasury and Resources has deferred the States' debate on P.41/2023 to 12th September 2023 so that the adoption of Part B of P.32/2023 can be considered in relation to the proposals within P.41/2023.

Terms of reference

​The review does not have any Terms of Reference, however, through a process of short evidence gathering, the Panel is requesting the views and comments of those with expertise on the subject matter to assist in informing its Comments.



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