GuernseyTax Obligations Detailed

Guernsey employers face several tax obligations, including income tax, social security contributions, and adherence to filing deadlines.

Income Tax

• Corporate Income Tax: Companies resident in Guernsey are taxed on their worldwide income at a standard rate of 0%. Specific income, such as banking income or income from regulated fiduciary activities, is taxed at 10%.
• Filing and Payment: Corporate tax returns are due by 30 November of the following year (e.g., the 2025 return is due 30 November 2026). Tax payments are typically made in two installments, due 30 June and 31 December.
• Employees' Tax Instalment (ETI): Employers deduct income tax directly from employee salaries under the ETI system, remitting it to the Guernsey Revenue Service.

Social Security Contributions

• Rates and Limits (2025): Employers contribute 7% of employee gross earnings up to the monthly cap of £15,717.00 per employee. Employees contribute 7.4% of their gross earnings up to the same monthly limit.
• Directors: Directors with substantial control of a company are now considered employees for social security purposes, with contributions deducted by the employer. Directors could opt to remain self-employed for five years if they chose to do so before 31 December 2024.

Secondary Pensions

• Phased implementation of secondary pensions began 1 July 2024, requiring employer and employee contributions. For 2025, both employers and employees contribute 1% of earnings between specified lower and upper limits. This percentage rises gradually each year, reaching a combined 10% by 2032 (3.5% employer, 6.5% employee).

Filing Deadlines

• Corporate Tax Returns: 30 November following the tax year (e.g., 30 November 2026 for the 2025 tax year).
• Personal Tax Returns: Personal tax returns for the 2024 tax year are due 30 November 2025. Subsequent personal tax returns are due 30 November of the following year.

Other Taxes

• No VAT/GST: Currently, there is no Value Added Tax (VAT) or Goods and Services Tax (GST) in Guernsey, although there are proposals to introduce GST in 2027.
• No Net Wealth/Inheritance Tax: Guernsey does not impose net wealth, worth, or inheritance taxes.

It is essential for employers to stay updated on tax regulations and comply with all requirements. Professional advice is recommended for navigating the complexities of Guernsey's tax system.

In Guernsey, employee tax deductions primarily involve income tax and social security contributions, deducted directly from salaries through the Employees Tax Instalment (ETI) system.

Income Tax

• Flat Rate: Guernsey operates a flat income tax rate of 20% for residents and those deriving Guernsey-source income. A proposal to increase this rate to 22% over two years (2025-2026) has been put forward to address a projected debt.
• Personal Allowance: For 2025, the personal allowance is £14,600. This means earnings up to this amount are tax-free.
• Allowance Reduction: For earners above £82,500, the personal allowance is reduced by £1 for every £5 earned over this limit.
• Tax Caps: Residents can elect to cap their tax liability. One option restricts tax on non-Guernsey income to £110,000, plus tax on Guernsey-source income (excluding bank interest). Another caps tax on worldwide income at £220,000. Income from Guernsey land and property is excluded from these caps and taxed at the standard 20% rate. Married couples are subject to a single cap.
• Pension Contributions: Tax-deductible contributions to Guernsey registered pension schemes are capped at the lower of 100% of gross earnings or £50,000 (subject to allowance reductions for high earners).
• Benefits in Kind: Benefits provided to employees are generally subject to income tax and social security, with a £450 annual exemption. Certain benefits, such as share options, accommodation, and motor car benefits, are fully taxable and not covered by the exemption. Specific guidance from the Income Tax Office exists for valuing such benefits. Medical insurance is typically exempt.
• Mortgage Interest Relief: As of 2025, mortgage interest relief on Guernsey principal residences is no longer available. This relief, previously applicable to the first £400,000 of a mortgage, has been phased out.

Social Security Contributions

• Employee Contributions: The employee social security contribution rate for 2025 is 7.4% of gross earnings.
• Employer Contributions: The employer contribution rate for 2025 is 7%.
• Earnings Limits: The monthly upper earnings limit for social security contributions in 2025 is £15,717, and the lower limit is £797.33.
• Directors: As of 2025, directors with substantial control of a limited liability company are treated as employees for social security purposes. An opt-in choice exists for directors to remain classified as self-employed for five years, provided the application is made before December 31, 2024.

Tax Administration

• ETI: Income tax and social security contributions are deducted from employee salaries through the Employees Tax Instalment (ETI) system, operating through payroll.
• Tax Returns: For the 2025 tax year, returns are due by November 30, 2026.
• Payments: Tax is typically due in two installments, by June 30 and December 31 of the tax year, with a final balancing payment due after assessment. Interim assessments with quarterly installment payments are expected.
• Coding Notices: Employers use coding notices issued by the Revenue Service to determine the tax-free allowance for each employee. These notices are sent annually.

Other Taxes

Guernsey does not levy Value Added Tax (VAT), Goods and Services Tax (GST), net wealth/worth taxes, or inheritance tax. Document duty exists; further information is available in corporate tax summaries.

It's crucial to remember that this information is based on the available data as of today, February 5, 2025, and may be subject to change. Consulting official government resources or a tax professional is recommended for the most up-to-date and personalized guidance.

Guernsey does not currently have a Value Added Tax (VAT) or Goods and Services Tax (GST) system. However, the government has proposed implementing a GST in 2027, with plans outlined in the 2025 Budget. A proposed registration threshold of GBP 300,000 has been suggested, meaning businesses with a turnover below this amount would likely be exempt from registration. This threshold aims to minimize the administrative burden on smaller businesses. While specific details about the GST implementation, including rates and exemptions, have not yet been finalized, more information may become available closer to the anticipated 2027 implementation date.

Other Taxes and Social Security Contributions

While Guernsey doesn't have VAT/GST, it does have other taxes and social security contributions that employers and employees need to be aware of.

Social Security Contributions for 2024

• Employer Contributions: 6.9% of an employee's gross earnings up to GBP 179,868.
• Employee Contributions: 7.2% of gross earnings up to GBP 179,868.
• Self-Employed Contributions: 11.9% of gross earnings up to GBP 179,868.
• Non-Employed Contributions: 11.3% (under pension age) or 3.7% (over pension age) of gross earnings up to GBP 179,868.

Corporate Tax

• Companies in Guernsey are taxed at 0%, 10%, or 20%, depending on the nature of their business.
• All tax-resident companies conducting specific financial and service activities must demonstrate they have "economic substance" in Guernsey. This includes having adequate personnel, physical premises, and operational expenditures within the island and conducting core income-generating activities there.
• Companies need to register with the Revenue Service and file an annual tax return.

Filing Deadlines for Corporate Tax Returns

• 2023 tax returns: January 31, 2025.
• 2024 tax returns: November 30, 2025.
• 2025 tax returns onwards: November 30.

Income Tax

For the 2024 tax year:

• Tax is due in four equal installments: April 15, July 15, October 15, and January 15 (following year).
• Those with only employment/pension income and/or bank interest may be exempt from filing if they receive written notification from the Guernsey Revenue Service.
• Payment is due within 30 days of receiving an assessment from the Guernsey Revenue Service.

Global Minimum Tax

Guernsey has adopted the OECD's global minimum tax rate of 15% ("Pillar 2") for fiscal years starting on or after January 1, 2025.

It is important to note that tax laws and regulations are subject to change. Consulting with a tax advisor is recommended for the most up-to-date and personalized advice. This information is current as of February 5, 2025.

Guernsey offers several tax incentives for individuals and businesses, primarily focusing on property and rental income.

Personal Income Tax Incentives

• Personal Allowance: For 2025, the personal allowance is £14,600. This allowance reduces the amount of income subject to tax. This is an increase from £13,900 in 2024. The threshold at which personal allowances are withdrawn has increased to £82,500, up from £80,000 in 2024. For every £5 of income above this amount, the personal allowance is reduced by £1. The allowance starts to decrease above £82,500.
• Mortgage Interest Relief: Tax relief on mortgage interest for principal private residences will continue. For 2025, individuals can deduct up to £3,500 in mortgage interest from their taxable income. This applies to the first £400,000 of the loan. The planned phase-out of this relief has been paused. For domestic let properties, 50% of the interest paid is deductible.
• Rent-a-Room Relief: Starting in 2025, individuals renting out up to two furnished rooms in their primary residence (excluding guest houses or B&Bs) can claim an exemption of up to £10,000 per room. The rooms cannot be self-contained units. This is intended to address the housing crisis by making more rooms available for rent.
• Child Allowance: The child allowance will increase to £9,490 for the 2025 tax year, rising from £8,850 in 2024.

Tax Caps

• Standard Income Tax Cap: A standard income tax cap of £160,000 applies to non-Guernsey source income. A further £160,000 can be claimed against Guernsey-source income, meaning a total cap of £320,000 on worldwide income.
• New Resident Tax Cap: A reduced tax cap of £50,000 is available for new residents who purchase open market property worth at least £1.5 million within 12 months of arrival and pay at least £50,000 in document duty. This reduced cap is applicable for the first four years of residency.

Other Tax Features

• Income Tax Rate: The standard income tax rate for residents is 20%. It will temporarily increase to 22% for 2025 and 2026, returning to 20% in 2027 to address a budget deficit.
• No Capital Gains Tax: Guernsey does not have a capital gains tax.
• Pension Contributions Relief: Tax relief is available on pension contributions up to £35,000 per individual.
• Document Duty Relief for Downsizing: The scheme encouraging downsizing by providing relief on document duty is extended for two more years.

This information is current as of February 5, 2025, and may be subject to change. Always consult with a tax professional for personalized advice.