High Value Residents and their tax obligations (FOI)

​Request

In the recently published 'Post Implementation Review of Jersey's High Value Residents Regime Applicable since July 2011' it is stated in section 3.9 that some High Value Residents (HVRs) cannot now meet their expected annual minimum income tax contribution'.

Could you please tell me how many HVRs, and as a result the amount of money the Treasury is losing out on?

Response

The Post-Implementation Review of HVR Regime applicable since July 2011 is available at the following link:

Post-Implementation Review of HVR Regime applicable since July 2011

The report contains details of the number of HVRs who have arrived since 2005 who are meeting the expected annual minimum tax contribution. This information has been reproduced below.

Currently, the Taxes Office are only able to charge income tax on a taxpayer’s taxable income. This statement applies equally to HVRs as to all other taxpayers. The Taxes Office charges income tax on the entire taxable income of each HVR and hence, although certain HVRs are not meeting their ‘expected’ minimum income tax contribution, the Treasury is not ‘losing out’ on any income tax. Each HVR is paying the amount of income tax that they owe based on their taxable income and the Taxes Office cannot make them pay any more.

Extract from the Post-Implementation Review of HVR Regime applicable since July 2011 Report

The expected annual minimum income tax contribution (new regime)

There is an expectation that each HVR relocating under the post-July 2011 regime will generate an income tax liability of at least £125,000 yearly. This expectation is articulated in a Ministerial Decision of the then Housing Minister dated 30 December 2010. [* see below]

Those HVRs who established tax residence in 2012 and 2013 have met their expected annual minimum income tax contribution for all years of assessment up to and including the 2014 year of assessment (the most recent year for which the Taxes Office holds complete data). [** see below]

The table below identifies (for the 2012, 2013 and 2014 years of assessment) those HVR designated taxpayers who: (i) arrived in 2005 onwards; and (ii) were in Jersey for the complete year of assessment (i.e. it excludes those HVRs who arrive / leave or die part way through a year of assessment). It then identifies the number of those HVRs who fully satisfied their expected annual minimum income tax contribution.

To aid analysis the table distinguishes between those HVRs who relocated under the regime that applied from 2005 to July 2011 and those HVRs who relocated under the post-July 2011 regime. 

In some of cases, where the HVR has fluctuating income and as a result does not have sufficient income to generate the expected minimum income tax contribution in one year, they may ‘over pay’ in another year so as to meet the expected contribution when averaged over a number of years.

Table 8 : HVRs Meeting the Expected Annual Minimum Income Tax Contribution of £125,000 (New Regime)

Source: Taxes Office

Notes:

• HVRs that have obtained HVR status on social grounds have been excluded on the basis that they are not expected to make an annual minimum income tax contribution – they pay income tax normally

• The reasons for HVRs not meeting the expected annual minimum tax contribution are diverse and include the following:

• Redundancy

• Reduction in investment income due to decreasing returns

• Economic factors impacting business income such as property income losses or inability to proceed with business transactions

• Change of income sources

* See appendix 4.

** In the year of arrival each HVR is expected to pay the £125,000 expected annual minimum income tax contribution appropriately time apportioned (eg if an HRV arrives on 1 December they would be expected to pay a minimum of 1/12th of £125,000 in that year of assessment).