The Isle of Man is situated in the heart of the British Isles. The Island is an internally self-governing dependent territory of the British Crown.
The taxation system in the Island is entirely separate from that of the UK, apart from Value Added Tax which is predominantly the same and charged largely in accordance with the same law that applies in the UK.
The benefit of a completely separate tax system is that the Isle of Man can enjoy low income tax rates of 10% and 20% for individuals and a 0% rate of tax for companies on most income.
The tax advantages available to Isle of Man resident individuals and companies are summarised below.
The tax regime applicable to Isle of Man residents includes the following elements.
- Irrevocable five year election to pay a fixed annual amount of £200,000 tax per person with effect from 6 April 2021 if you elect in 2020/21 (£400,000 for a married couple)
- Tax free allowances for 2020/21 of £14,250 per person (£28,500 for married couples)
- 10% tax on first £6,500 of income above the personal allowance (£13,000 for married couples)
- Top marginal rate of income tax of 20%
- No capital gains tax, inheritance tax or stamp duty
- Tax relief for interest paid to an Isle of Man lender including mortgage interest, loan interest and overdraft interest up to a maximum of £5,000
The tax regime applicable to Isle of Man companies includes the following elements.
- 0% rate of income tax on most income
- 10% rate of income tax on banking business
- 10% rate of income tax on retail businesses with annual taxable profits of £500,000 or more
- 20% rate of income tax on income from Isle of Man land and property, e.g. rents/property development profits
- No requirement to deduct withholding tax from most dividend and interest payments
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