By Chris McFadyen
LOOKING at our island’s tax revenue in the newly published 2025 accounts, it appears that about £734m (59%) comes from personal income tax, about £184m (15%) comes from companies, £122m (10%) comes from GST, £66m (5%) from stamp duty, and £65m (5%) from import duties. The remaining 6% from various sources.
When the previous figures were published a couple of years ago, one politician immediately jumped up to say that the tax burden fell too heavily on individuals, and that companies should be paying a much higher amount.
It only showed how little knowledge some politicians have of how Jersey collects its taxes. Since about 2013, the profits of most companies are taxed through personal income tax. His comments, while wrong, sounded good to many people. I wait for him to say the same this year.
In broad terms, companies pay tax on income from property at 20% and financial services companies generally pay 10% tax on their profits. Financial services companies owned locally will also pay an additional 10% through their owners’ personal tax assessments. Some other companies, such as energy producers, also pay tax at 20%. All other company profits are taxed at 0%, which sounds great, but any dividends from companies are assessed at 20% through personal taxation, and there are anti-avoidance measures to ensure that profits cannot be taken out as loans, etc.
So, a large proportion of company profits are paid through personal taxation. The reasons for this situation are complex, but they are there to ensure that we can operate competitively as a finance centre.
The last detailed statistics on personal income tax go back to 2024 and show some interesting results, which have probably remained roughly constant in 2025:
In 2024, there were about 54,900 taxpayers out of a population of, say, 105,000, paying a total of £648m. This, however, may be a bit misleading.
I am using the term “taxpayer”, as I assume that a joint return by a husband and wife will be regarded as one taxpayer. Obviously, there are also a number of large groups in our society who are not taxpayers, including, say, 20,000 being children or those in education.
However, with some rounding adjustments:
- 420 taxpayers paid 12% (£77.5m) of the total income tax collected.
- 2,890 taxpayers paid 32% of the total collected (£208m).
- 27,000 taxpayers paid 13% (£84m), representing almost half of all taxpayers.
- 19% of taxpayers paid 60% (£390m) of the total collected.
Our tax take is very dependent on high-net-worth individuals, those working at senior levels within the finance industry, and corporation tax from the finance sector itself. Of course it is not just the earning of those sectors but the taxpayers which they in turn employ, and the monies that they spend in the local economy, be it buying new cars, frequenting the local restaurants, employing gardeners, decorators, plumbers, electricians, etc – the list is almost endless.
Our place as a financial centre is always fragile, and it would not take much for our island to become out of favour. Businesses are, as I write, moving away from the Middle East finance centres and, indeed, we could well benefit from those moves.
But it does show how quickly established centres can crumble, for one reason or another.
High-net-worth individuals come to settle in our island for many reasons, many unconnected with the finance industry itself. However, they are just as fragile as our finance centre, and small changes, either locally or in other jurisdictions, could reduce our attractiveness.
Imagine you are a blood donor giving blood on a regular basis, say every three months (NB I know little about blood donating). There is a shortage and you are asked to come in and donate on a more regular basis. No problem, it is needed, and it may be saving lives locally. The intervals become even shorter, and you are starting to feel a bit tired and generally under the weather. Another call comes in for you to donate, and you start to think long and hard as to whether you want to stay in the programme, especially as the paperwork that is needed each time is now more detailed and intrusive.
Both our high-net-worth individuals and our finance industry are just like blood donors: take too much away, and add to the bureaucracy, and they will simply move on.
Some of our politicians think that more taxes on high-net-worth residents, and on the finance industry, is the way forward. It’s the old saying, the most popular taxes (or indeed laws) are those that don’t affect you – someone else can pay! But will they continue to pay?
The present UK government made that very mistake when they came to power and predicted that the scrapping of non-domiciled reliefs would have little effect on their tax take. Entrepreneurs and high-net-worth individuals are no longer coming to the UK, and those already in the UK are leaving with their businesses. The taxation lost is in the billons. An example of the problem is that one very well-known UK firm of high-end estate agents has closed in the last few weeks, as too many expensive properties are for sale and almost no one is buying them.
Locally, over-regulation, and the subsequent increase in the number of civil servants employed, seems to be the current trend. The new residential tenancies law is one that should have been looked at with a more targeted approach, it could have been a good law supported by everyone.
I just hope our new government will have the courage to reduce regulation and build a diversified economy.
Chris McFadyen was born and educated in Jersey and qualified as a chartered accountant in the 1970s. He set up his own business and subsequently sat on many industry bodies advising on legislation which still governs practice in the sector today. He has been married to his wife, Caryll, for 45 years and has two children and two grandchildren.
