For individuals considering relocating or emigrating to the Isle of Man, there are many things to consider from a personal and professional perspective. The Isle of Man as an independent jurisdiction has its own legislation and favourable taxation system, which is completely separate to its UK counterparts. This allows corporates and individuals on the Island to enjoy the benefits of independence when it comes to direct taxation matters.
The Benefits of being Tax Resident in the Isle of Man
• Simple taxation regime
• No insurance premium tax
• Stable legal and political environment
• European time zone
• Robust regulatory system
• High quality international reputation
• 0% Inheritance Tax
• 0% Capital Gains Tax
The Isle of Man is also on the OECD ‘white list’ of jurisdictions that comply with the global standard for tax cooperation and exchange of information.
Rates and Allowances 2022/23
Personal Allowances
• Single Person – £14,500
• Jointly Assessed Couple – £29,000
• Additional Personal Allowance – £6,400
Income Tax Rate Thresholds
• Standard Rate – 10%
• Higher Rate – 20%
• Non- Resident Rate – 20%
Standard Rate Tax Thresholds
• Single Person – £6,500
• Jointly Assessed Couple – £13,000
• Balance taxable at – 20%
Income Tax Cap Amount Thresholds
• Single Person – £200,000
• Joint Assessed couple – £400,000
When will I be considered Tax Resident in the Isle of Man?
An individual who has the ‘intent of establishing residence’ will be considered a ‘tax resident’ from the date of their arrival on the Island, to the date when they permanently depart.
There are also specific rules that determine tax residency based on a person’s ‘physical presence’ on the Island where the following must be considered:
• Where an individual has resided on the Island for a period of six months (equal to 183 days) or more during the tax year;
• Where an individual’s visit(s) to the Island over a period of four or more consecutive tax years exceeds the three month (90 day) maximum allowance per year;
• Where an individual’s visit(s) to the Island average more than 90 days per year.
Registering with the Isle of Man Tax Division
An individual will be considered an Isle of Man tax resident when they have the intention to stay or permanently reside on the Island.
Following this, they must register as an Isle of Man tax resident with the Isle of Man Income Tax Division as soon as possible, even if they have no employment or have not commenced any employment in the interim.
The Income Tax Division requires that all new residents and individuals intending to stay on the Island register for tax purposes by completing a R25 Registration for Manx Income Tax form.
Once tax registered, the Income Tax Division will issue a tax reference number, which will be unique to the individual and will be used for tax issues, queries and when filing any income tax returns thereafter.
Preparing an Isle of Man Tax Return
The tax year in the Isle of Man starts on the 6th of April and ends on the 5th April the following year. Individuals then have until the 6th October to file their income tax return (no matter what income has been earned) or late filing penalties will be issued.
Isle of Man residents are also taxable on any worldwide income, which means that they are required to declare any worldwide income should they have any.
The Isle of Man Government also has an online platform that provides a range of services including Customs & Excise and Income Tax. Find out more information at www.services.gov.im.
Tax Liabilities
An individual is required to pay any tax liabilities incurred (following the end of the tax year) by 6th January, or within 30 days of the assessment being raised, if it is after that date. For any late tax liability payments, interest will accrue.
