The Tax Information Exchange Agreement (TIEA) signed with the United Kingdom in March 2009 and ratified by the States in July came into force on the 27 November, following the completion of the formal internal procedures by both parties to the Agreement.
Accompanying the TIEA is an Arrangement amending the 1952 Arrangement between Jersey and the United Kingdom for the Avoidance of Double Taxation and the Prevention of Fiscal Evasion with respect to Taxes on Income (“the 1952 Arrangement”), also signed in March 2009. This incorporates a major change to the tax treatment of pensions, which means that Jersey residents will no longer be taxed by the UK tax authorities on certain pensions they have received from the United Kingdom.
The Comptroller of Income Tax, Malcolm Campbell, commented: “Following the enactment in the UK of the Double Taxation Relief on International Tax Enforcement (Jersey) Order 2009, Jersey residents in receipt of a UK pension may apply to the UK Tax Authority, HM Revenue and Customs (HMRC), to have, with effect from the 6 April 2010, their UK pension paid to them without the deduction of UK tax”.
He continued: “This Arrangement could mean significant savings in terms of tax paid for some Jersey residents, who could have been paying 40% tax to HMRC on their pension and who may in future be subject to tax at 50%. The Arrangement means that, subject to a claim being made and accepted by HMRC, Jersey residents will only be paying tax in Jersey, at a maximum rate of 20%, on their UK pension.”
The Arrangement also affects residents of the United Kingdom who have been paying Jersey tax on their Jersey pensions. Under this Arrangement UK residents will be able to apply to the Comptroller to stop having Jersey tax deducted from their Jersey pensions and only pay tax in the United Kingdom.
The full Tax Information Exchange Agreement and the Arrangement amending the 1952 Arrangement between the Government of Jersey and the United Kingdom for the Avoidance of Double Taxation and the Prevention of Fiscal Evasion with respect to Taxes on Income, and guidance notes, is on the Income Tax website. Jersey residents in receipt of UK taxed pensions may find out details of the UK claim process on the HMRC website.
Notes to Editors:
For further information and comment please contact Malcolm Campbell, Comptroller of Income Tax – tel: 01534 440323
15 Tax Information Exchange Agreements have been signed by Jersey to-date, 13 of which are with OECD and G20 countries. 11 of the Agreements are now in force and the remaining 4 are expected to come into force early in 2010