Minister to be grilled over “immoral” overseas pension tax

Friday 06 July 2018

The States are finally set to face the music over why thousands of Jersey ex-pats – including a former radio DJ – are being taxed at the top rate of 20% on their pensions, despite not being entitled to use any of the island’s services.

In a hearing later this month, the Treasury Department will be forced to justify the removal of all tax breaks for overseas pensioners – a move introduced in the 2017 Budget by former Minister Alan Maclean in a bid to raise an extra £500,000 for the States yearly.

But, as revealed by Express last year, the measure was blasted by former Jersey residents living abroad as “immoral”, while the Income Tax Commissioners of Appeal observed that it had created “a level of hardship which it is highly unlikely the legislature intended.” 

For one Portugal-based couple, the Howards*, it meant paying triple the amount of tax they would have done in Jersey - £6,000 instead of £2,000 – and being left with savings of under £10,000.

Another islander who now lives in Murcia, Spain, told Express that the money he would have saved if the tax breaks had remained in place could have contributed to a knee operation.

Meanwhile, Roger Bara, a BBC DJ of 20 years was also hit. He downsized to a home in Northern Cyprus due to Jersey’s high cost of living upon retirement, and questioned why he and his wife would not be allowed free use of the hospital if they got ill while visiting family in Jersey, despite paying the highest possible tax rate.

Pictured: Former DJ Roger Bara, who blasted the top tax rate as "immoral."

The issue has been the subject of much discussion on a newly-created Jersey expat Facebook group, but, despite strong concerns being aired via the media and numerous letters sent to the Taxes Office and States Members, many reported feeling ignored and unheard.

But that could be set to change, as Treasury officials will face questions from a new panel of politicians tasked with examining the department’s policies.

Chaired by Senator Kristina Moore, and including recently-elected Deputies Steve Ahier and Jess Perchard and Constables Karen Shenton-Stone and Richard Vibert, the Corporate Services Scrutiny Panel met this week to understand why the changes were introduced and to “discuss whether any action is required.”

Following discussions, Senator Moore confirmed to Express that the Panel agreed to question the new Treasury Minister, Deputy Susie Pinel, on the issue during their first public hearing next month.

The Corporate Services Panel is meeting this morning. Items for discussion include taxation of non-residents pensions. Full agenda can be found here: https://t.co/UYuQdxg3Qo @Moore4Jersey @JessePerchard #StatesAssembly #ScrutinyJSY #CSSPjsy pic.twitter.com/EY2XJoxwzg

— Jersey Scrutiny (@jerseyscrutiny) July 3, 2018

The decision comes following correspondence from struggling expats sent to Senator Moore and Deputy Pinel on the matter, asking if they could do anything to help “ease the burden.”

“At the moment, I get charged a flat 20% on my 30k Jersey private pension. That is 500 pounds a month. For what? I have no connection to Jersey whatsoever anymore. Apart from having the misfortune to have my private pension in a Jersey Fund. I fail to see why this allows Jersey to tax me at source at the top rate without any allowances… This MR [marginal relief, ed.] is causing me quite some hardship,” Mr Howard wrote to the pair.

Mr Bara says he is still waiting for answers on why the law was introduced in the first place. “I would love to know why this law was changed. Nobody has been able to tell us. No States member can remember...” he commented.

While no promises can or have been made at this stage by political officials, both Mr Bara and the Howards* are hopeful that a Scrutiny review could be the first step towards solving the problem.

*Names changed to protect privacy.

READ MORE:

Overseas Jersey pensioners "being taxed too much"

DJ brands overseas pension tax as "immoral"

Tax Commissioners: Overseas retirees blighted with unintended pension tax "hardship"