Call for independent taxation to be optional

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OLDER married couples are ‘uneasy’ at the prospect of being ‘forced’ to move to independent taxation, according to a States Member.

Deputy Lyndon Farnham has lodged a proposition calling for independent taxation not to be made mandatory for married couples and civil partners who currently complete a joint tax return.

Legislation being presented to the States this year will make it compulsory for all married couples and civil partners to be independently taxed from 2025.

After an initial push to reform the personal taxation system from former Treasury Minister Susie Pinel, the States Assembly agreed that, from 2022, anyone who gets married or enters into a civil partnership or anyone arriving in Jersey will be responsible for filing their own tax returns and paying their own bills.

Deputy Farnham said his proposition ‘fully supports’ the previously agreed position of independent taxation as the ‘default position’ for all new married couples and civil partners.

He added: ‘However, I believe a number of Islanders are uneasy about the retrospective nature, which would force all existing taxpaying couples to begin filing independent returns. I support independent taxation, but I didn’t vote to make it compulsory or retrospective.

‘Islanders who have contacted me from the older generation of our community don’t understand the rationale of forcing this on them when the joint tax return has been working exceptionally well for married couples since the Income Tax Law was introduced in 1928.’

His proposition seeks to allow existing taxpaying married couples and civil partners to continue to file joint tax returns should they choose to.

In answer to an oral question earlier this month, Social Security Minister Elaine Millar confirmed that out of approximately 19,000 tax-paying married couples and civil partners, only 121 couples from a pilot group and 282 others had opted for independent taxation for 2022 and 2023.

‘It is proving to be most unpopular,’ Deputy Farnham said.

‘Many Islanders simply don’t want to change but would like, for ease, to continue operating with the existing system.’

While there is no financial impact for some couples, the new tax rules mean that approximately 7,000 couples would see their tax liability increase. If one partner’s income falls below the single person’s income tax threshold, which was £18,550 for 2023, and the other partner’s income is more, the two independent tax bills added together may be higher than the amount that would have been paid under the current allowances.

The couple will be able to claim a compensatory allowance for the difference when independent taxation becomes compulsory, but it is proposed that such an allowance will only be in place for ten years.

Deputy Farnham added that the logistics of the compensation scheme, particularly for the older generation, posed more of a problem where the husband or wife had never completed a tax return prior to this.

In addition, where one individual may have become ill or incapacitated and physically unable to complete a form, there are no exemptions to allow a joint return.

The proposition is due to be debated on 13 June.

Deputy Farnham acknowledged that it might be a ‘challenge’ to get all States Members on board but said: ‘It’s certainly worth a debate in the States.’

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