With a tax system that is friendly and higher wages in certain areas than those in the UK This means you’re likely to receive a higher ‘final take-home pay’ and live a luxurious lifestyle at the same time.
If you’re considering moving to the Isle of Man, then you are likely to be contemplating how your move might benefit your career, quality of life, and even your financial situation. With a relaxed tax system and higher pay in some sectors than in the UK it is likely to receive a higher “final take home” and live an enjoyable life at the same time.
Here, we provide you with insights and advice to make your move as simple as is possible…
1. You’ve left and you’re arriving to tax reporting
When you leave a country it is your responsibility to comply with local rules and tell the tax authorities that you’ve gone and generally settle your tax matters there. When you arrive on the island, you and your spouse must complete the registration form for the Manx the income tax return.
This includes basic information about you, your spouse, the location you reside, or plan to live, and your expected income and other pertinent information. The earlier you start this process, the earlier your Income Tax Division will issue you with a tax reference number.
You might also need to obtain an identity card with a national number. It could involve a short interview with the government. Once you’ve been certified for income tax, an income tax return will be sent to your registered address in order to complete the required tax year.
Note Tax year begins from April 6 to April in the year following.
2. Registering for employment
Your employer will likely be able to obtain a work permit for you to work. Anyone who is employed in the island is required to have work permits except for Isle of Man worker. If you’re self-employed, or setting up a business, you are able to apply for a work permit directly. If you belong to specific categories of employment (eg those in IT and electronic business) you may fall into an exemption to work permit. In addition, if you intend to move to the Island it is not necessary to need a work permit to work, if in doing so have satisfied the requirements set out in the island’s immigration legislation.
Partners (Civil, Spouse or co-habiting partner) of the Isle of Man worker are eligible for an automatic 1-year work permit even you haven’t secured Isle of Man employment. It is possible to apply for this yourself online . You will need to provide an IOM Work Permit referent, personal details including employment information (if relevant), and evidence of the relationship to that of the IOM Worker (marriage/civil partnership certificate or Cohabiting partner Additional Information form). The cost of such a permit starts at PS60 and it can be renewed annually.
If you are a holder of a work permit and you’re certified for income tax the employer will register you as an employee and you will be provided with a tax ID for the tax division that you pay. This will indicate any deductions you may be entitled to, such as personal allowances. It will also be applicable when calculating the tax you pay on your salary.
3. Opening an account with a financial institution
The island has a number of banks well-known, and opening an account should be relatively easy if you’re prepared. You’ll have to fill out various forms and provide the original identity documents, like a passport. When you’ve got all of the necessary documents on hand it should be simple. You may also need evidence of the source from which your wealth is coming from, so it’s important to are prepared to answer these questions. A majority of banks won’t even create a bank account until you have a residency address in the island.
Furthermore, most professionals and institutions will have to verify your identity before they can address your case, so it’s an ideal idea to prepare this basic documentation in the event of meeting with investment advisers as well as accountants, lawyers, as well as other providers of services.
4. Minimising non-IOM taxes
Once you are an Isle of Man resident for tax reasons, you’ll have to pay Manx tax on any income earned worldwide except if you qualify for Key Employee Concession. Your employer may apply for this if you are a key employee. If this applies for 3 tax seasons, you’ll only have to pay Isle of Man income tax on your Isle of Man employment income and nothing else. Your employer can request this on your behalf. it’s an incentive. The result of a global basis for taxation is that you are required to report each year your entire income (even if you have paid tax on the income in another country). If you pay tax outside of Isle of Man, paid, you can claim credit for the tax that you pay against you Isle of Man liability.
Being an Isle of Man tax resident does not mean that you are not being treated as a tax resident in another country as well (depending upon the fiscal rules in that country) or from being liable to tax in any other country because of your residence status there or the source of your income (which could be derived from another country, eg non-Isle of Man rental income).
The Isle of Man does not charge capital or wealth taxes. However, you could, however be subject to capital tax in other countries based on local laws in the respective countries and in which areas assets are located.
5. Rent or buy?
You can choose to purchase or lease a home in the Island or even have your employer let it to you. If your employer rents a property for your benefit, you’ll be taxed on the advantages of this rental by them as part of your salary. If you choose to rent the property, you must enter into a lease which typically lasts for 12 months or more although shorter term leases are available A real estate agent will be able to assist you.
A house or flat may not be as easy particularly if you have to get a mortgage. This may take some time, it is also the case if you don’t have a strong credit history, banks might not be able lend to you. It is essential to establish a credit history so that when a bank begins to deal with your credit and begins to conduct its score, you’ll be able to satisfy their requirements. A credit history that is used to calculate an credit score is an account of your accountability in paying off debts. In order to build a credit history you should ensure you keep your credit card balances under control or completely eliminate them. Pay your debts and bills as they’re due, and do not engage in any risky activity.
6. You can invest your money
The Isle of Man has a relatively low tax rate and thanks to the absence of capital tax, you are likely to be able to enjoy more disposable income once you’ve paid the Isle of Man income tax. This can give you the opportunity to invest more in stocks and shares. The Isle of Man has a fairly simple tax system and the law isn’t comprehensive. With no capital taxes you only need to consider income, which means you have a much wider investment freedom than other countries as far as taxes are generally. But, due to the tax system’s flexibility, investment returns are treated as income, so it is important to check with your tax professional, about how return on investment is taxed.
