At 3%, Guernsey’s proposed GST sounds a lot lower than the UK’s 20% VAT.
But, for many everyday purchases, shoppers in the island could end up paying tax where people in Britain currently pay none, as Express explores…
Policy and Resources (P&R) wants to introduce GST at 3% as part of the biggest package of tax reforms in a generation.
If the changes go through, we wouldn’t be the only place in the world to have a similar tax. In fact, about 170 countries have some form of GST, including the UK and Jersey.
But how would Guernsey’s proposed sales tax compare to VAT in the UK – other than being a lot lower than the standard 20% rate?
One big difference is the range of everyday items that would attract GST in Guernsey but are VAT-free in the UK.
Food, tap water and children’s clothes are all VAT-free in the UK, but in Guernsey they’d be taxed at the standard rate, which would start at 3%, but could go up.
Other everyday items Guernsey plans to tax – but the UK doesn’t – include books, newspapers and school meals.
The UK also applies a reduced 5% VAT rate to some items, including household electricity and children’s car seats, which Guernsey doesn’t.
However, the 5% reduced rate of VAT is still higher than Guernsey’s 3% introductory rate.
Why the difference?
In the UK, things like food, water, children’s clothes and access to learning through books and newspapers are seen as basic necessities.
So taxing them is seen as unfair, especially on lower-income families.
Guernsey has opted to include them for simplicity, in line with the approach taken by some other smaller jurisdictions, like Jersey.
The last States did consider excluding food from GST as part of the previous GST+ package of reforms, but rejected doing so as they said this would have increased the tax from 5% to 6%.
Deputy Lindsay de Sausmarez, P&R President, told Express the proposals were “more closely aligned to Jersey’s GST, with a very low rate and broad base to keep the application as simple as possible”.
She added: “This means that the treatment of specific goods and services may be different.
“The UK’s policy complexity (with a wide range of exemptions etc) means its standard rate has to be much higher than the proposals in the 2026 Tax Reform Package (20% VAT versus 3% GST) and so is less economically efficient and more administratively burdensome as a result.”
What is GST-free? (and what’s not)
We asked P&R for a breakdown of what will be GST-free if proposals are approved, so we could compare it to the UK.
We’ve highlighted major differences between Guernsey and the UK with bold red text, and minor differences in orange.
Basics
| Item | GST (Guernsey) | VAT (UK) |
|---|---|---|
| Supermarket food | 💰 3% taxed | ✔️ 0% VAT-free |
| Books | 💰 3% taxed | ✔️ 0% VAT-free |
| Newspapers & magazines | 💰 3% taxed | ✔️ 0% VAT-free |
| Restaurant meals | 💰 3% taxed | 💰 20% taxed |
| Takeaway food | 💰 3% taxed | 💰 20% taxed |
Home running costs
| Item | GST (Guernsey) | VAT (UK) |
|---|---|---|
| Tap water (domestic supply) | 💰 3% taxed | ✔️ 0% VAT-free |
| Electricity (domestic) | 💰 3% taxed | ⚠️ 5% reduced rate |
| Electrical emergency call-outs | 💰 3% taxed | 💰 20% taxed |
| Electrical goods sold by Guernsey Electricity (TVs, fridges etc) | 💰 3% taxed | 💰 20% taxed |
| Heating oil / LPG | 💰 3% taxed | ⚠️ 5% reduced rate |
Children and education
| Item | GST (Guernsey) | VAT (UK) |
|---|---|---|
| Children’s clothing | 💰 3% taxed | ✔️ 0% VAT-free |
| Children’s car seats | 💰 3% taxed | ⚠️ 5% reduced rate |
| School lunches | 💰 3% taxed | ✔️ Usually VAT-free* |
| Private school | 💰 3% taxed | 💰 20% taxed |
| Toys | 💰 3% taxed | 💰 20% taxed |
* Evening meals for boarders at private schools are subject to VAT.
Transport (everyday + discretionary)
| Item | GST (Guernsey) | VAT (UK) |
|---|---|---|
| Flights (passenger tickets) | ✔️ 0% (zero-rated) | ✔️ 0% VAT-free |
| Ferry travel | ✔️ 0% (zero-rated) | ✔️ 0% VAT-free |
| Excess baggage fees | ✔️ 0% (zero-rated) | ✔️ 0% VAT-free |
| Seat selection fees | ✔️ 0% (zero-rated) | ✔️ 0% VAT-free |
| Airport parking | 💰 3% taxed** | 💰 20% taxed |
| Harbour / marina parking | 💰 3% taxed** | 💰 20% taxed |
| Marina and harbour charges | 💰 3% taxed | 💰 20% taxed |
** Parking on Guernsey Ports sites is expected to be subject to GST, subject to additional legislation.
Household goods and retail
| Item | GST (Guernsey) | VAT (UK) |
|---|---|---|
| Clothing (for adults) | 💰 3% taxed | 💰 20% taxed |
| Furniture | 💰 3% taxed | 💰 20% taxed |
| Electrical goods | 💰 3% taxed | 💰 20% taxed |
| DIY materials | 💰 3% taxed | 💰 20% taxed |
Healthcare
| Item | GST (Guernsey) | VAT (UK) |
|---|---|---|
| GP consultations | ✔️ Exempt | ✔️ Exempt |
| Hospital charges (patient-paid) | ✔️ Exempt | ✔️ Exempt |
| Dental treatment | ✔️ Exempt | ✔️ Exempt |
| Optical services | ✔️ Exempt | ✔️ Exempt |
| Prescription medicines | ✔️ Exempt | ✔️ 0% (zero-rated) |
Housing and property
| Item | GST (Guernsey) | VAT (UK) |
|---|---|---|
| Residential rents | ✔️ 0% (zero-rated) | ✔️ Exempt |
| Social housing rents | ✔️ 0% (zero-rated) | ✔️ Exempt |
| Mortgage payments | ✔️ 0% (outside scope) | ✔️ Exempt / outside scope |
| Estate agency fees | 💰 3% taxed | 💰 20% taxed |
| Building control fees | ✔️ Exempt | ✔️ Outside scope / exempt |
| Planning applications | ✔️ Exempt | ✔️ Outside scope / exempt |
Financial services and insurance
| Item | GST (Guernsey) | VAT (UK) |
|---|---|---|
| Bank charges | ✔️ Exempt | ✔️ Exempt |
| Mortgage arrangement fees | ✔️ Exempt | ✔️ Exempt |
| Insurance premiums | ✔️ Exempt | ✔️ Exempt (subject to Insurance Premium Tax instead) |
Professional services
| Item | GST (Guernsey) | VAT (UK) |
|---|---|---|
| Legal services | 💰 3% taxed | 💰 20% taxed |
| Accountancy services | 💰 3% taxed | 💰 20% taxed |
| Architectural services | 💰 3% taxed | 💰 20% taxed |
