Policy and Resource’s ‘Budget for Growth’ includes plans to finish phasing out mortgage interest relief, and an increase in fuel duty – which should then reduce when the GST+ tax package comes in during 2029.

While the main budget proposals focus on growing the economy, with a £15 million investment programme planned, there is also support for industry sectors and charities.

Business support

P&R wants to offer targeted support to “parts of the local economy facing particular challenges”.

This includes plans to freeze Tax on Real Property rates for the hostelry, retail and warehousing sectors.

A new tap relief scheme is proposed to reduce alcohol duty on qualifying draught beer, cider and wine sold at pubs, bars, and restaurants.

The £15m planned investment in economic growth initiatives will be phased over the next three years, and will be funded from the money expected from the new Pillar 2 taxes.

Projects supported through the fund will have to demonstrate “clear and measurable economic benefits and value for money”.

A new Entrepreneur Tax Cap is also proposed “to help attract entrepreneurs and new business activity to the Bailiwick”.

Charities

The maximum tax relief available for charitable donations is proposed to increase from the current £10,000 per individual up to £50,000.

This would also increase the maximum tax benefit available to a charity from £2,500 to £12,500.

P&R says this would significantly enhance support for Guernsey’s charitable sector and encouraging greater philanthropic giving.

Personal Income Tax Allowances

An inflation increase in the Personal Income Tax Allowance of £650, raising it to £15,850 (up by RPIX/4.3%).

The upper cap for Higher Earners is being frozen at the current level which is £85,000.

The personal income tax allowance is withdrawn at a rate £1 for every £5 that an individual’s income exceeds the £85k threshold. P&R says freezing it at this level will increase revenues by circa £800,000.

£2,500 of relief on pension contributions is protected from withdrawal.

Homeowners and buyers

Mortgage Interest Relief for Principal Private Residences is to be phased out over next three years.

P&R also wants to “explore targeted measures, working with the Committee for Housing, to support first-time buyers and younger homeowners as part of a broader approach to increase home ownership”.

Motor Taxes

P&R wants to put excise duty on motor fuel up by inflation (4.3%) from 1 January 2027.

This would increase the cost of a litre of fuel by 3.9p per litre to 94.4p per litre.

This is ahead of the change in the way motorists are taxed under the Tax Reform plan agreed last week which will see fuel duty reduced by 25% when vehicle tax is introduced, along with a high-value surcharge for new vehicles. This is expected to change from January 2028.

There will also be an inflation (4.3%) linked increase in Vehicle First Registration Duty.

Tax on Real Property

Domestic TRP and the majority of commercial TRP tariffs are proposed to increase in line with inflation (4.3%).

In line with the Tax Reform plan approved last week, TRP rates for the hostelry, retail and warehousing sectors will be frozen, while the tariff for commercial car-parking land will increase by 15%.

Cigrattes, Vapes, and Alcohol

In line with previously agreed terms, tobacco and alcohol duties will face ‘real-term increases’.

For tobacco this will be a 9.3% price rise – made up of inflation forecast (4.3%) plus 5%.

The new duty on vaping liquid will come in at £2.20 per 10ml of liquid.

For alcohol, a 6.3% duty increase is proposed (4.3% inflation forecast plus 2%).

There will also be a 10-15% ‘Tap Relief’ decrease in duty on qualifying beer, cider and wine
products supplied in containers of 20L or larger, to support the local hospitality
industry.