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on November 18, 2024
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A self-governing British Crown Dependency in the Irish Sea, the Isle of Man has introduced a great many things to the world, ranging from the Manx language and the Manx cat (distinguished by a short or absent tail) to the legendary Isle of Man TT motorcycle races. However, this jurisdiction between Great Britain and Ireland has also long been noted as a tax haven.
That reputation is by no means undeserved; the Isle of Man does indeed maintain a tax regime that makes it an attractive place to establish and operate a business.
The territory’s standard rate of corporate income tax is 0%, although a 10% rate applies to some sectors. When this is considered alongside the lack of capital gains, wealth, or income taxes on the island, it isn’t difficult to see why significant numbers of individuals and organisations are interested in the prospect of setting up in business here.
Even bearing in mind all the above advantages, it is also true that for any given person or organisation that decides to establish a presence on the Isle of Man, tax efficiency is unlikely to be their only reason for doing so.
This is a part of the world, after all, that presents many other benefits for those who may aspire to live and work here, including the bracing outdoor lifestyle, a welcoming community, and the virtual absence of crime. The Isle of Man also offers easy connectivity to the UK and Europe, including through daily flights and ferry crossings.
Nonetheless, in this article, our specialists in immigration law at Cranbrook Legal will particularly look at the taxation system in the Isle of Man, which is almost entirely separate from that of the UK.
We state “almost”, because Value Added Tax (VAT) on the Isle of Man is predominantly the same as in the UK, and is charged largely in accordance with the same law applicable in the UK.
The Isle of Man levies low taxes on personal and corporate income alike. This helps make the territory an attractive one for companies and shareholders that wish to streamline their tax liability.
With regard to taxes on personal income, individuals who are resident in the Isle of Man are liable to tax on their worldwide income, from all sources:
As of the 2024/25 tax year, the threshold at which the higher rate becomes payable is £6,500 in the case of an individual, and £13,000 for a jointly assessed married couple or civil partners. For a single person, the personal allowance is £14,500, while for jointly assessed married couples or civil partners, it is £29,000. Allowances are apportioned for part year periods of residency.
With effect from 6th April 2023, the personal allowance is lowered by £1 for every £2 that a person’s total income exceeds £100,000 (£200,000 for jointly assessed couples). So, in the event of a given individual’s total income being £129,000 or higher (£258,000 or higher in the case of jointly assessed couples), their personal allowance will be zero.
As far as corporate income on the Isle of Man is concerned, companies resident in the territory are taxed on their worldwide income. Three rates of corporate income tax (CIT) apply.
A 10% CIT rate applies to income from:
A CIT rate of 20% applies to income derived from real estate on the Isle of Man. On all other income, no CIT is payable.
Whether a given company is obliged to pay CIT at the 0%, 10%, or 20% rate, or a combination of these rates, they are subject to the same general rules for the calculation of taxable income. Both resident and non-resident companies on the Isle of Man are taxed on their income at the same rates.
It should be noted that with effect from the 2024/25 tax year, a new 15% rate will be imposed on certain banking businesses and large retailers. This rate will only be applicable to those banks and retailers whose profits would otherwise be subject to a top-up tax outside the Isle of Man under the Organisation for Economic Co-operation and Development’s (OECD) Pillar 2 Global Minimum Tax initiative.
If you are interested in expanding or relocating your business to the Isle of Man – or for that matter, setting up an entirely new business in the jurisdiction – there are various steps you will need to take.
It is imperative that you research and plan well in advance. This way, you will be able to make informed decisions, drawing upon strong knowledge of the Isle of Man’s business environment, regulations, and tax system.
As part of this research and preparation stage, you will need to evaluate the feasibility and potential benefits of establishing a business presence on the island. You will also need to determine the legal structure that will work best for your intended Isle of Man business – such as a sole trader, partnership, or limited liability company.
From the initial research right through to the formal planning, the registration of your business with the Isle of Man Companies Registry, the opening of a business bank account, and ensuring compliance with the local tax obligations and filing requirements, it is crucial that you seek professional advice to help make your move a success.
It will also be of the utmost importance to educate yourself on the immigration and visa requirements for the Isle of Man. Again, the advice and guidance of a well-qualified professional can make a great difference.
If you hold a British passport or have been granted “indefinite leave to remain” in the UK, you will be able to move to the Isle of Man without needing to apply for a visa. Otherwise, you can expect to need to submit a visa application.
Anyone who intends to work in the Isle of Man – even if they are a British, Irish, or European citizen – must check whether they need a work permit for the territory, prior to starting work.
As a general rule, anyone who is not classed as an “Isle of Man worker” can expect to require a work permit. However, exemptions apply for certain occupations and employments, as well as for certain temporary employments.
Here at Cranbrook Legal, we have an excellent track record of helping people to get approved for the Isle of Man Innovator visa. This is a powerful visa aimed at those who wish to set up or run a business in the territory.
Holders of this visa are entitled to set up one or multiple businesses in the Isle of Man, and to work for their business. They may do this as a director, or instead as a self-employed member of a business partnership. They also have the right to bring family members with them to the Isle of Man.
However, in order to be granted this visa, you will need to satisfy the Isle of Man Government’s eligibility criteria. Before you are permitted to apply, it will be necessary to have your business or business idea assessed by the Department for Enterprise. If the department deems your business to be viable, you will be issued with an endorsement letter.
Even if you are successful in obtaining an endorsement letter, you will need to satisfy the English language requirement for this visa route. Furthermore, you must be at least 18 years of age, and able to prove that you have sufficient personal savings to support yourself during your time in the Isle of Man.
Applicants for the Isle of Man Innovator visa who intend to set up a new business in the territory are expected to have a minimum of £50,000 in investment funds. It will not be necessary for the applicant to have funds if their business is already established and has previously been endorsed for a visa.
Our award-winning specialists in immigration law at Cranbrook Legal can hold your hand through the entire process of applying for, and being granted, the Isle of Man Innovator visa. We can project-manage your case from start to finish, for a pre-agreed fixed fee.
Please call 0208 215 0053 to learn more about this highly regarded service and how we can assist with your application.
The short answer to this question is: depending on your circumstances, it might well be!
As can be said about moving to virtually anywhere else in the world, moving to the Isle of Man will not necessarily be the right solution for everyone. For example, while the territory’s income tax rates are nearly universally lower than those in the UK, in your case, the gap might not be sufficiently large to justify relocating here unless you are an especially high earner.
On the other hand, there are various factors – putting aside the matter of tax – that might well make relocating to the Isle of Man one of the best decisions you ever make. These include:
To learn more about the exciting and rewarding new life that you could soon be embarking on as a business owner in the Isle of Man, and how we can help make it a reality, please contact the Cranbrook Legal team today. You are welcome to call us on 0208 215 0053, or to fill in and submit our online contact form, so that you can arrange a free consultation.
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