Overseas Jersey pensioners “being taxed too much”

Tuesday 05 December 2017

A retired Jersey couple living abroad who pay the top rate of tax on their pension say that the rules on the 20% rate are in breach of their human rights.

The Portugal-based islanders, whose names have been changed due to an upcoming appeal, say the current tax system loses them up to £4,000 a year simply because they decided not to retire in Jersey.

That’s because tax allowances are dropped for those in receipt of a pension who decide to fully cut ties to the island and settle abroad, meaning that they have to pay ‘20 means 20’ rate of tax.

In this couple’s case, they’re paying £6,000 per year, when they would be paying just £2,000 in Jersey.

“When we lived in Jersey we were entitled to marginal relief. Marginal relief would’ve reduced our tax bill by 70% or something like that. Because we don’t live in Jersey anymore, we lose all such benefits. Now, given we don’t live in Jersey and we don’t use the services that taxation funds that just seems really unfair to us,” Mr Howard told Express.

The issue, he said, was one of unfortunate timing and a “discriminatory” tax policy.

After taking early retirement in 2013 through no choice of Mr Howard’s own, the couple found themselves struggling to keep pace with the cost of living in the island. In 2015, they decided to make a move.

“We found it very expensive to live in Jersey just on a pension. We found it quite difficult so we made the decision to sell up and start again down here, which we don’t regret, but this Jersey income tax bill still grates and grinds.”

Pictured: The formerly Jersey-based pair dispute their current tax rates - they claim that they should not be discriminated against just because they chose to leave the island.

But that decision to move abroad coincided with the 2016 Budget, which ushered in a change: the removal of non-residents’ tax relief.

The move, the Treasury Minister said at the time, would see the island take in an extra £500,000 by making a portion of people not in Jersey pay the top rate of tax on any income derived from the island.

"It kind of caught us out immediately - the very next tax return."

But while the Howards are not against paying tax, they say that not being allowed a relief is unjust - and argue that it could even be a breach of their human rights.

“If you read the Universal Declaration of Human Rights, Article Two says you should not be discriminated against by virtue of your residence. Now that to me seems pretty cut and dry that they can’t do that,” he said.

They’ve so far taken their appeal to the Taxes Office, which apparently “fell on deaf ears”.

Their next move is to return to the island next Spring to make a formal appeal against the charge in a bid to get their “lost” pension money back. “Hopefully it will fall on sympathetic ears,” Mr Howard added.

If successful, the appeal could have wider implications for others who have settled abroad.

A recent Freedom of Information (FOI) request revealed that over 13,000 islanders in receipt of a pension no longer resided in Jersey - more than 40% of the overall number of people receiving an island pension.