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

Scrutiny review - Corporate Services Panel

Launch date: 09/06/2023

Review status: Comments published

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.6/2024 (hereafter "the Proposition"). The Proposition was lodged by the Minister for Treasury and Resources on 15th January 2024 for earliest debate in the States Assembly on 27th February 2024 (deferred to 16th April 2024). If adopted, the revised proposals (previously P.41/2023) will respect the States' decision regarding P.32/2023 and will allow couples who were married and resident in Jersey before 2022 to file joint tax returns. However, the couple would still be assessed independently for income tax to ensure the benefits of Independent Taxation can be achieved. 

Deputy Doublet lodged an amendment to the proposition on 13th February 2024 for the Assembly's consideration alongside P.6/2024. The amemdment proposes removing Article 3 which will remove the option for married or civil partnered couples to complete a joint tax form and thus make the proposals truly independent and CEDAW compliant. 

Proposition P.32/2023

Deputy Farnham pre-empted Stage 2 of the Law with his own proposition - P.32/2023.  On 5th July 2023 the Assembly voted against removing the mandatory nature of Independent Taxation (P.41/2023) but voted for the Minister for Treasurey and Resources to take the necessary steps to ensure that joint taxation (joint filing) remained available for married couples and civil partners who currently could complete one tax return. 

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.

Review progress

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. Consequently, the Minister for Treasury and Resources initially deferred the States' debate on P.41/2023 to 12th September 2023 so that the adoption of Part B of P.32/2023 could be considered in relation to the proposals within P.41/2023. The decision was taken to withdraw P.41/2023. On 15th January 2024, the Minister for Treasury and Resources lodged revised proposals - P.6/2024, which takes into consideration the conflicting States' decision in respect of Part B of P.32/2023. P.6/2024 is scheduled for earliest debate on 27th February 2024. The Minsiter has deferred the debate to 16th April 2024 for the Panel to seek feedback on the revised proposals. 

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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