"We should be letting in more high-net-worths to Jersey - not fewer"

Friday 14 October 2022

The Government is wrong to want to reduce the number of high-net-worth residents and should be encouraging more wealthy people to move to Jersey, islanders in the property and relocation business have argued.

This week, Chief Minister Kristina Moore published her Council’s Ministerial Plans for the next year.

One of her priorities is to “update the 2(1)(e) policy to enhance the economic, social, and benefits to the Island from a fewer number of 2(1)(e) applicants, while valuing our high value resident community.”

‘2(1)(e)’ is the article in the island’s Control of Housing and Work Law that sets the rules around wealthy immigrants, who can buy a house straightaway, as long as it is worth more than £2.5m. For an apartment, it has to be more than £1.25m. 

They also have a separate tax arrangement, paying 20% on all income up to £750,000 and 1% on all income thereafter.

A recent question asked in the States Assembly revealed that the income tax generated from income chargeable at 1% for all 2(1)(e)s was £134,000 in 2018, £269,000 in 2019, and £570,000 in 2020.

There are around 200 2(1)(e)s in Jersey, 70 of them paying a mandatory minimum annual personal income tax charge of £145,000 a year, which the Government wants to raise to £170,000.

Estate agents Margaret Thompson and Roger Trower, who both sell properties in the 2(1)(e) bracket, agreed that the £25,000 increase in the minimum tax threshold was reasonable but Mrs Thompson urged caution on reducing the number of high-net-worth residents.

Pictured: Estate agent Margaret Thompson said: "We mustn't forget the added value."

She said: “I think as long as the Government takes a sensible approach and does not make drastic cuts to reduce the current numbers, as I believe this could have a serious impact on the generous donations given annually from 2(1)(e)s to charities and sporting events within the island.

“We mustn’t forget the added value that incoming people provide for the island by employing people from builders to lawyers and so on. 

“It is a very fine line we must tread very carefully. We are competing with lots of jurisdictions some of which have a zero-tax policy.”

Mr Trower was more forthright in his criticism; indeed, he argued that the Government should be seeking to attract more 2(1)(e)s, not fewer.

“The Chief Minister should not be focusing on new high-net-worths,” he said. “The good that they do by being here far outweighs any negative view you might get from the detractors like Reform, who just don’t understand.

“It isn’t even that many people, about 20 a year, and I would like to see more of them. A lot of work goes on with charities, golf days, buying things at auctions and other work behind the scenes.

“I think the National Trust, Société Jersiaise and other organisations would find life tougher without them. 

“Ultimately, they also want to give their families a lovely, safe place to live, as well as structure their family businesses in a way that means they won’t lose their wealth after making it. 

Pictured: Supporters of the 2(1)(e) regime say wealthy people choose Jersey for the lifestyle as well as lower or non-existence taxes.

“The two main things that they want to avoid is capital gains tax and inheritance tax. The ones who really want to avoid income tax aren’t in Jersey; they are in other places where you pay literally nothing.”

Mr Trower added that he supported efforts by the Government to get more data on the contribution of 2(1)(e)s. It would hopefully prove their true value, he said.

Mary O’Keeffe, who helps people move to the island, said: “My sense is that the Government is trying to read the current mood of many. Times are hard with the energy crisis and having just come through covid. People can be resentful of those who have more.

“The tax that high-net-worths contribute is the least of what many contribute to the economy. Some have helped to promote Jersey to the wider world in business. They buy a property they employ local people to run them, they employ local people to renovate their homes, plumbers and decorators and electricians, architects, surveyors, interior designers, cabinet makers etc. 

“Of course, this doesn’t include restaurants, hairdressers, nail bars, coffee houses, shops, therapists, or medical professionals.”

She added: “Most are philanthropists on the island and indeed their application encourages this aspect. Many give discreetly to local charities, and you will never know who they are but the amounts are significant. 

“I know with my Crimestoppers Jersey hat on, the well-known author Peter James and his wife have completely immersed themselves into island life. 

“Peter is the Patron of Crimestoppers Jersey and he continues regularly to help us raise funds and awareness of the charity. He has also provided the States of Jersey with some much-needed new cars. This is probably only the tip of the iceberg of what he does here.

“The Jersey Hospice Ball held recently raised circa £350,000 - a phenomenal amount of money with many of the 2(1)(e)s bidding the highest.”

Pictured: Relocation specialist Mary O'Keeffe: "I am disappointed to hear about the negativity surrounding 2(1)(e)s."

Mrs O’Keeffe said: “I am disappointed to hear about the negativity surrounding the 2(1)(e)s. It definitely sends a negative message of ‘You’re Not Welcome Here’ and it is making some feel uneasy, especially having uprooted themselves and chosen to settle their families here. 

“There are other low-tax jurisdictions that they can move to: Malta, Gibraltar, Monaco, St Kitts and Nevis, Switzerland, for example. It is the convenience of the UK that is why many choose to relocate here.

“I would like to know where the tax reduction will be made up and what happens to all the people who rely on them for work.

“Jersey has always been an open and cosmopolitan island and I would hate to see it change.”