The government has sought to reassure Islanders after some reported receiving eye-watering tax demands they didn’t recognise.

Letters recently sent to taxpayers about outstanding 2019 “frozen” prior year tax liabilities – which came about as a result of changes to the tax system during covid – prompted a wave of social media posts from people who said the amounts did not match what they believed they owed.

As of this week, almost 24,000 taxpayers still have outstanding frozen tax liabilities totalling more than £278 million, according to the Treasury.

The department wrote to Islanders this week to “remind them of their options” ahead of a 30 September deadline this year.

Those options are:

  • paying the amount through an interest-free payment plan of instalments over a maximum of 17 years (in a 17-year plan, the final payment would be due on 31 December 2043);
  • waiting to pay the full amount on reaching States Pension age; or
  • paying in full now.

After the letters prompted a wave of concern, officials issued a statement this morning, clarifying the deadline and confirming that a dedicated support team had been put in place to help Islanders affected.

“We have previously notified affected Islanders of their liability and their options to pay. We wrote to them again recently to remind them that they should choose their preferred option by 30 September this year,” they said.

“If they do not make a choice, they will automatically be put on a 17-year payment plan. Those who wish to take this option do not need to take any action.

“We have set up a dedicated support team for those affected by this issue. Islanders who have any questions or concerns can contact them directly by calling 440300 and selecting option 2 for Personal Tax, then option 4 for the Prior Year Basis team.”

Queries can also be made online.

EXPLAINED: What is Jersey’s ‘frozen’ 2019 tax?

Why does it exist?
Before 2020, around 45,000 Islanders paid income tax on a Prior Year Basis (PYB) – meaning their tax bill was calculated using the previous year’s income.

What changed?
In 2020, Jersey switched to a Current Year Basis (CYB), meaning people now pay tax on the income they earn in the same year.

Why was the change made?
The reform had been planned for years but was accelerated during the covid-19 pandemic. Ministers said it would make the tax system simpler and help people whose incomes had fallen during the crisis, rather than leaving them to pay a tax bill based on higher earnings from the previous year.

What happened to the 2019 tax bill?
Rather than collecting it immediately, the States agreed to freeze taxpayers’ 2019 liability and temporarily take on the debt to avoid financial hardship during the pandemic.

Do people still have to pay it?
Yes, because the liability was deferred, not written off. Read more below about the change below…