Tax plan U-turn sees thousands offered 20 years to pay last year's bill

Friday 30 October 2020

The Treasury Minister has effectively announced a 'holiday' for thousands of taxpayers after putting forward plans to allow those who currently pay in arrears to settle their 2019 bill over 20 years or after their retirement.

Deputy Susie Pinel initially suggested a payback period of five or ten years from 2023 for Prior Year Basis (PYB) taxpayers to facilitate a major overhaul of the system that will see PYBs moved to Current Year Basis (CYB), if the States Assembly approves.

The decision has divided opinion, with many asking how their 2019 bills will be paid with the switchover, and half of respondents to a Government survey saying they do not support repayment over a five to ten-year period.

More than 5,000 islanders also signed a petition calling for the bill to be written off, but Deputy Pinel said the Government wasn't in a position to cancel the £320m bill "due to the additional covid-19 related costs the Government has had to meet over the last few months."

In a report accompanying the new proposals, it is stated that if the proposals are passed, PYB taxpayers who 'pay on account' could defer their November 2020 payment, and PYB taxpayers who saw their income reduced in 2020 would be likely to have a lower ITIS rate in 2021.

However, it claims that, if the proposition is not voted in, the opposite will happen, and they will pay more on their ITIS. It also estimates that the proposition will save taxpayers at least £18 million overall.

Looking at the new draft payment options the Minister has outlined in the report, PYB taxpayers could choose to sign up to a 20-year payment plan, starting in 2022 but with no obligation to pay anything until 2025. 

Pictured: Taxpayers would also be able to pay using the existing system under the options suggested.

Though regular payments with a minimum amount of liability would be expected on at least an annual basis, taxpayers could overpay if they wanted to clear liability, or apply for a ‘payment holiday’ of up to a year if their financial circumstances changed. 

There would also be a second option to use existing arrangements or establish arrangements for people to pay when they reach Pension Age, though the money would be needed within twelve months of reaching that age.

The report also addresses taxpayers who have earned more in 2020 than 2019, and who want to freeze their 2020 liability instead of their 2019 one. The Minister has requested that legislation be drafted to give Revenue Jersey more freedom to “smooth out” ITIS effective rates for them, so that their monthly tax deductions remain manageable. 

The Treasury Minister commented: “Reforming the tax system in this way is an ambitious proposal, and one which Islanders care deeply about: they have taken the time to sign a petition, respond to our survey, and get in contact with me personally to share their views.

“I’ve listened to all of the feedback, including the views expressed in last week’s in committee debate and the top-level findings of the focus groups we commissioned, and have looked to address the concerns raised with our outline payment options. 

“We’re now looking to provide PYB taxpayers with greater flexibility and control over when they pay their 2019 tax bill. By providing this information ahead of next week’s debate, I hope it will enable both the States Assembly, and the public, to have a greater understanding of the options before any changes are made.”

Revenue Jersey will notify and PYB taxpayers who 'pay on account' of any immediate impact on them and will write to all PYB taxpayers if the proposition is passed in the States Assembly debate scheduled for next Tuesday (3 November).