Treasury and Resources
Ministerial Decision Report
2014 Budget – enacting legislation IN RESPECT of the DRAFT 2014 BUDGET PROPOSALS
- Purpose of Report
The purpose of this report is to present a summary of the Minister’s budget proposals relating to the following enacting legislation ahead of lodging on 8 October 2013:
- Finance (2014 Budget) (Jersey) Law 201-
- Income Tax (Amendment No. 43) (Jersey) Law 201-
- Income Tax ( Prescribed Limit and Rate) (Jersey) Regulations 201 -
The legislation will be lodged together with the 2014 Budget Proposition and Draft 2014 Budget Statement.
- Background
The legislation supports the 2014 Budget proposition and the proposals contained within the draft 2014 Budget Statement.
- Proposals
A summary of the proposed measures to which the enacting legislation relate are listed below:
Income Tax Proposals
Unless specifically stated, all changes come into effect for year of assessment 2014.
The Minister proposes the following;
Exemption thresholds
The income tax exemption thresholds for the year of assessment 2014 shall increased by 1.5% in line with the increase in inflation to June 2013.
Allowances
With the exception of the enhanced income tax exemption threshold for parents of children in higher education [see below], the allowances will remain at the same level as in 2013.
Decrease in the Income Tax Marginal rate
The marginal rate of tax shall be decreased from 27% to 26%.
Enhanced income tax exemption threshold for parents of children in higher education
The tax relief available to parents (taxed at the marginal rate) who have children over the age of 17 years that are in full-time higher education shall be increased by adding £3,000 per child to the parent’s income tax exemption threshold.
Remove the restriction to child allowance by reference to the child’s income
The current restriction in the relief based on the child’s earned income is removed so that any earned income of the child is not taken into account when calculating both the standard and higher child allowances.
Increase the age of entitlement for single, married persons and civil partners to the higher income tax exemption threshold
The age entitlement of 63 years is increased to 65 years with grandfathering provisions for those taxpayers who are under 65 but currently in receipt of the higher exemption.
Income Tax Instalment System (ITIS) provisions – restrict credit to controlling directors
The Income Tax Law is amended to ensure the provision of a tax credit in circumstances where income tax deducted has not been paid over to the Comptroller no longer applies to controlling directors.
Create level playing field for oil importation and distribution companies – liable to tax at 20%
The Income Tax Law is amended to ensure that all profits arising from the importation and / or supply of oil are liable to tax at 20%.
The Income Tax Instalment System (ITIS) – Mandatory online filing
The Income Tax Law is amended to allow the Comptroller to introduce mandatory online filing for ITIS returns from employers.
Lump Sum Donations – revoke 3 year rule of residence prior to making Lump Sum Donation
The current 3 year rule which prevents new residents making donations to charities under the Lump Sum Donation provisions is revoked.
Allowing existing 1(1)(k) residents to be taxed under the post July 2011 income tax provisions that relate to 1(1)(k)s
Allowing some taxpayers who were granted a housing consent under regulation 1(1)(k) of the Housing (General Provisions) (Jersey) Regulations 1970 to be taxed under the ‘new’ (post July 2011) income tax regime.
Strengthening the income tax law on tax relief for interest
An amendment to the interest relief rules that will give the Comptroller the power to limit the amount of interest that may be deducted where the interest incurred exceeds the amount that could reasonably be expected to be charged on a commercial basis.
Allowable deduction on account of social security contributions revised for self employed
The Income Tax Law is amended to accommodate the changes to the Social Security Law from 1 January 2012 regarding the introduction of Additional Class 2 contributions above the earnings ceiling.
Repeal of credit for electronic delivery of income tax return
Remove the entitlement to a £20 deduction from the amount of tax payable by an individual if they file their personal tax return online.
Changes to the company Distribution Rules
A number of minor changes to the Distribution Rules introduced in the 2013 Budget to ensure they are operating as intended. This includes measures to address the situation where a shareholder switches from the simplified basis of taxation to the calculated basis of taxation.
Goods and Services Tax Proposals
All Goods and Services Tax proposals are included in the draft Finance (2014 Budget) (Jersey) Law 201-.
Definition of existing building – clarification and strengthening of existing policy
The introduction of a definition of the term “existing building” in the legislation to ensure that only the construction of new dwellings from the ground up will be eligible for the 0% rate and building services on existing residential property are subject to the 5% rate.
Input tax blocking order on white goods, carpets and similar goods supplied in zero rate dwellings
Introduce legislation to clarify the current GST policy and practice which requires developers and vendors of new dwellings zero- rate to accounts for GST on the sale of any “white goods”, carpets and other removable goods commonly supplied in new residential units.
Deregistration process
Introduce legislation to allow the Comptroller, taxpayers and their agents greater flexibility in agreeing the date from which GST deregistration should apply.
Align the GST treatment of imported goods with domestically sourced goods
Introduction of legislation to align the treatment of goods that have been imported by a Customs approved importer with those that have been sourced in Jersey with a recovery of the GST to ensure that both categories of goods are considered when applying the provisions which exist to apply a GST charge when goods (e.g. cars) are taken to private use or when a business deregisters for GST.
Discretionary power to the Comptroller to allow input tax claims that would otherwise be capped at 3 years
Introduce legislation to give the Comptroller a limited discretionary power to allow, upon application, input claims that would otherwise be capped at 3 years.
Impôts Duty Proposals and Stamp Duty
All impôts duty, Stamp Duty and Land Transactions Tax measures are included in the draft Finance (2014 Budget) (Jersey) Law 201-.
Increase the duty on alcohol, tobacco, fuel and VED by the following:
- 11% increase in duty on a litre of spirits – £1.27 per litre.
- 5% increase in duty on a bottle of table wine – 7p per bottle.
- 5% increase in duty on a pint of weaker beer and cider (not exceeding 4.9% abv) – 2p per pint.
- 11% increase in duty on a pint of strong beer and cider (exceeding 4.9 abv) – 6p per pint.
- Increase on the duty on 20 king size cigarettes by 11% – 47p per packet of 20 cigarettes
- Increase on the duty on all fuels by 2% – 1p per litre
- Increase on all VED (Vehicle Emission Duty) bands by 5%
Stamp Duty and Land Transaction Tax Proposals
First time buyers
Continue the extension of the maximum threshold for first-time buyer relief from £400,000 to £450,000 until 31 December 2014.
- Recommendation
It is recommended that the Minister for Treasury and Resources approves the 2014 Budget enacting legislation together with the European Court of Human Rights Statements and that the legislation be lodged au Greffe on Tuesday 8 October 2013 so as to allow the 2014 Budget proposition to be debated by the States at the sitting of 3 December 2013.
It is also recommended that the Minister request that an Act of Declaration is lodged so that the legislation may have immediate effect.
- Reason for Decision
The 2014 Budget enacting Legislation is to be lodged “au Greffe” at least 8 weeks prior to debate on 3 December 2013 as required by the Public Finances (Jersey) Law 2005.
- Resource Implications
Staffing implications
The proposals within the draft 2014 Budget Statement will be implemented without any increase to current approved staffing levels.
Financial implications
The financial implications of the Budget proposals in 2014 would be an increase to States revenues of £294,000 compared to the forecast from the 2013 Budget with the income tax measures which relate to income tax year of assessment 2014 not impacting on States revenues until the financial year 2015.
Report author : Comptroller of Taxes | Document date : 3rd October 2013 |
Quality Assurance / Review : Business Manager | File name and path: L:\Treasury\Sections\Corporate Finance\Ministerial Decisions\DSs, WRs and SDs\2013-0092 - 2014 Budget - Enacting Legislation\WR - 2014 Budget - Enacting Legislation.docx |
MD sponsor : Treasurer of the States |
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