Plans announced to tax couples independently

Today, on International Women’s Day 2021, Minister for Treasury and Resources Deputy Susie Pinel has announced plans to start introducing Independent Taxation from 1 January 2022. 

Under the current tax system – which dates back to 1928 - married couples are assessed for tax as a single unit, and complete one tax return. After the legalisation of civil partnerships in 2012, and same-sex marriage in 2018, civil partners and same-sex couples are also assessed as a single unit.

For opposite-sex couples, the husband is deemed the ‘primary taxpayer’ and legally responsible for the payment of tax.  For same sex-couples, and those in civil partnerships, usually the eldest person is the primary taxpayer with legal responsibility for paying tax. 

Until 2021, only the primary taxpayer was able to speak to Revenue Jersey about their joint tax affairs.

Under the proposed change, both partners in a marriage or civil partnership would be treated equally and separately.  Each would become responsible for their own tax affairs: each would complete their own tax return, receive their own tax bill, and be responsible for paying it. 

In 2017 and 2018, the Minister for Treasury and Resources consulted with members of the public, the public sector and voluntary organisations. The responses showed a preference for a tax system which treated people as individuals. 

The work was paused in 2020, to allow officers to focus on reforming the Prior Year Basis (PYB) tax system to support Islanders whose income had reduced as a result of
COVID-19. The abolition of PYB will make further changes easier to achieve.

The Minister has proposed a phased introduction of Independent Taxation to enable couples to plan for the changes. Independent Taxation would become mandatory for people who are single on or after 1 January 2022, and for all new arrivals to the Island after this date, whatever their marital status.

For these people, there would be no material difference in the way they currently pay tax.  Most jurisdictions already have a form of independent taxation.

From January 2022, around 700 married couples and civil partnerships who elected for separate assessment for the 2020 tax year will also have the option to move to Independent Taxation for the 2022 tax year. 

From 2023 more Islanders will move to the new tax system, in phases. Further details about this will be published later this year.

Minister for Treasury and Resources, Deputy Susie Pinel, said: “On International Women’s Day 2019, I announced my intention to modernise our ‘archaic’ tax system and ensure that married women, same-sex spouses and civil partners are treated equally. 

“I’m proud to confirm that I will be lodging a proposal with the States Assembly this autumn, to introduce this reform from 1 January 2022.

“Our income tax laws and systems were introduced in 1928, and they reflect the customs and practices of that era; when men were considered the head of the household, fewer women worked and same-sex relationships were illegal.  

“In the intervening 93 years, Islanders’ lives and family structures have changed. As we know from our consultation in 2017 and 2018 - Islanders want a system that aligns with the equality they expect in their community, family, and relationships.”