Tax in the Isle of Man

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.

Individuals

The tax regime applicable to Isle of Man residents includes the following elements.

• Irrevocable five or ten-year election to pay a fixed annual amount of £200,000 tax per person for the tax year 2024/25 if election made in 2023/24 (£400,000 for a married couple).
• Tax free allowances for 2023/24 of £14,500 per person (£29,000 for jointly assessed couples). Note that, with effect from 6 April 2023, the tax-free allowance will be reduced by £1 for every £2 where total income exceeds £100,000 per tax year (£200,000 for a jointly assessed couple).
• 10% tax on first £6,500 of income above the personal allowance (£13,000 for jointly assessed 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.
• National Insurance Holiday Scheme for certain new residents and students who return to work on the island (subject to satisfying certain conditions). The scheme allows for a one-off refund of Class 1 National Insurance deducted during an individual’s first year of residence, up to a maximum of £4,400 in respect of applications received from April 2023.
• Special incentive for key employees that is relevant to new Isle of Man residents thinking of establishing new businesses in the island, as well as existing businesses that, in order to develop and expand, need to bring new key workers to the Isle of Man. Qualifying individuals will only be subject to Isle of Man tax on Isle of Man employment income, any benefits in kind and rent arising from Isle of Man land and property for the first three years of Isle of Man residence or during their period of employment, if shorter. This means any other Isle of Man source income or income from outside the Isle of Man will not be subject to Isle of Man tax.
• The Isle of Man currently has full Double Taxation Agreements with the UK, Guernsey, Jersey, Luxembourg, Singapore, Malta, Seychelles, Estonia, Qatar and Bahrain as well as agreements for the avoidance of double taxation on individuals with several other countries.

Companies

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