Maybe you’re wondering to move to Isle of Man to save on tax? Read on to find out the differences in tax rates in the Isle of Man and in the UK, corporation tax, income tax and what the benefits are for some taxpayers.
Corporation tax rates in the Isle of Man for most companies is 0%. This rate for corporation tax was introduced in 2006.
In the UK, profits made up to £300,000 are taxed at 21% for corporation tax. Any profits made after that up until £1.5 million are taxed at 29.75%. Therefore, corporation tax rates in the Isle of Man is significantly lower than in the UK.
However, if you are in the Isle of Man you will have to pay attributed tax. This is subject to if less than 55% of profits are extracted. Additionally, 45% of the profits can be tax-free. Therefore, there is more money for the taxpayer to reinvest and grow the business.
HappieGroup are able to provide payroll service to companies UK and in Isle of man with exceptional service. By using our payroll services you can spend time focusing on your business while we do the work for you.
Differences between Income tax rates in Isle of Man and UK
Income Tax rates in the Isle of Man:
- The first £9,200 is tax-free
- Next £10,500 is taxed at 10%
- Taxpayers who have an income above £19,700 are taxed at 18%
- High earning taxpayers have a £100,000 tax cap
Income Tax in the UK:
- The first £6,475 is tax-free
- Next £37,400 is taxed at 20%
- Taxpayers who have an income above £43,875 are taxed at 40%
- Taxpayers who have an income over £150,000 are taxed at 50%
Income tax rates in the Isle of Man are lower than in the UK. Although, Income tax is the largest source of revenue in the UK.
Tax benefits in the Isle of Man
Firstly, tax rates in the Isle of Man are lower than in the UK. If you earn a lot of money, then it would be worthwhile for you to move there.
Therefore, high earners will be income taxed at least 50% less than in the UK.
Moreover, tax rates in the Isle of Man for married couples can be taxed jointly. This gives taxpayers the benefit of having a tax free personal allowance, plus a 10% tax band being doubled up.
Additionally, the mortgage and loan interest is paid as a tax deduction of up to £15,000.
Lastly, Isle of Man provides support payments of up to £5,500 per child at the University which is deductible.
Tax benefits in the UK
Some taxpayers may qualify for not paying income tax on all of their income. This applies to taxpayers who are eligible for one or more types of tax-free allowances. Common tax-free allowances are:
- Child benefit
- Child tax credit
- Income-related employment and support allowance
- Maternity allowance
- Personal Independence Payment
- Housing Benefit
Working parents are eligible for tax-free childcare vouchers which are highly beneficial.