Alderney is part of the Bailiwick of Guernsey for the purposes of taxation and has a reciprocal agreement with Jersey and the U.K.

In Alderney there is:

• NO Value Added Tax.
• NO tax on capital.
• NO tax on inheritance.
• NO tax on exempt companies carrying on business outside the islands-see section Trusts/ Company Law.
• NO tax on trusts whose beneficiaries live outside the island
• LOW tax (only 20%) on profits of companies which carry on business in the island.
• LOW tax (20%) and generous personal allowances on income of persons who live in the island.
• PREFERENTIAL arrangements made for captive insurance companies based in the island.

Professional advice from a tax consultant familiar with Guernsey/ Alderney tax laws is strongly recommended.

It should be noted that pensions and other income left in the U.K. continue to attract U.K. tax although a double taxation agreement ensures that further tax is not paid.

A flat rate of 20% is levied after personal allowances which are generous by U.K. standards.

States of Guernsey Income Tax

For purposes of Guernsey Income tax, the ‘year of charge’ is the calendar year beginning on 1 January and ending 31 December.

Page 4 of this document sets out the rates of tax for the current year and a summary of the personal and other allowances to which an individual resident in Guernsey and Alderney in the current year is entitled.

(**) Please note that for the purposes of income tax, Guernsey and Alderney are treated as if they were one.

Residence for the Purpose of Guernsey Income Tax:

In order to determine the method of assessment on an individual liable to Guernsey Income Tax it is necessary first to consider that individual` residential status.

An individual who is resident but not principally resident in Guernsey (**) is chargeable on his Guernsey income, together with the amount of any income remitted to Guernsey from outside sources during the year of charge.

An individual who is solely or principally resident in Guernsey (**) is chargeable on his total income wherever it arises or accrues.

Residence for the purpose of Guernsey income tax is defined in the following extract from the Income Tax (Guernsey) Law 1975, section 3:

• 1. An individual shall be treated as being resident in Guernsey (**) in a year of charge if he:
• a) Is in Guernsey (**) in the year of charge for a period or periods amounting in all to one hundred and eighty-two days or more; or
• b) Is in Guernsey (**) during the twelve months commencing on the first day of August in the year preceding the year of charge and ending on the thirty-first day of July in the year of charge for a period or periods amounting in all to one hundred and eighty-two days or more; or
• c) Maintains or has maintained for him/her in Guernsey (**) a dwelling place for a period or periods amounting in all to ninety-one days or more in the year of charge, and is in Guernsey (**) for the year of charge for a period or periods amounting in all to ninety-one days or more; or
• d) Is in Guernsey (**) for any time in the year of charge with the intention of setting up a dwelling place therein, and in that or the following year of charge sets up such a dwelling place; or
• e) Having during the four years immediately preceding the year of charge been in Guernsey (**)for a period of or for periods amounting in all to three hundred and sixty-five days or more, is in Guernsey at any time during the year of charge, otherwise than on an occasional or casual visit.
• 2. An individual who in a year of charge is resident in Guernsey (**)but is not resident solely therein:
• a) shall be treated as being principally resident in Guernsey (**) if, in the year of charge:
• I. He maintains or has maintained for him/her a dwelling place or a place of business in Guernsey (**) but neither a dwelling place or a place of business elsewhere; or
• II. He maintains or has maintained for him/her a dwelling place in Guernsey (**) and has taken up permanent residence in Guernsey (**); or
• III. He neither maintains nor has maintained for him/her a dwelling place or a place of business in any country but is domiciled in Guernsey (**);
• b) shall, in a case to which paragraph (a) of this subsection does not apply, be treated as being principally resident in Guernsey (**) if he appears in view of all circumstances of his case to be so resident, regard being had in particular to his domicile, nationality and habits of life``

All income arising or accruing in Guernsey(**) is subject to Guernsey income tax.

All income arising or accruing outside Guernsey (**) to an individual who is solely or principally resident in (*, and all income arising or accruing outside Guernsey (**) which is remitted to Guernsey (**) during the year of charge by an individual who is resident but not principally resident in Guernsey is subject to Guernsey income tax but certain reliefs may be obtained as follows:

• A. Relief in respect of Double Taxation on income arising in the United Kingdom
  
  There is an agreement for the avoidance of double taxation as between the United Kingdom and Guernsey. Copies of the agreement may be obtained from the Greffe Office, Royal Court House, Guernsey.
  
  The effect of this agreement is that, in the case of any income arising in the United Kingdom which is subject to both the United Kingdom income tax and to Guernsey income tax, double taxation relief may be obtained and, in general terms, this relief would equal the amount of Guernsey income tax attributable to such income.
  
  Individuals resident in Guernsey (**) and having income which is subject to tax in the United Kingdom are entitled to claim relief from the United Kingdom Inland Revenue. If their United Kingdom income consists of dividends or debenture interest they are entitled to claim Unilateral Relief from the United Kingdom. It should be noted that with effect from 6 April 1999 relief is no longer available in respect of United Kingdom tax paid in respect of dividends and debenture interest. If their United Kingdom income consists of items other than dividends or debenture interest, claims for relief should, in the first instance, be submitted to the Administrator of Income Tax, Guernsey.
  
  
• B. Relief in respect of Double Taxation on income arising in Jersey
  
  There is an agreement for the avoidance of double taxation as between Jersey and Guernsey. Copies of the agreement may be obtained from the Greffe Office.
  
  The effect of this agreement is that Jersey income tax payable, whether directly or by deduction, in respect of income from sources within Jersey is allowed as a credit against any Guernsey income tax payable in respect of that income.
  
  
• A. Relief in respect of Income Tax paid In other countries
  
  Individuals resident in Guernsey (**) and having income which is subject to tax in other countries (i.e. other than the United Kingdom and Jersey) are entitled to claim relief from tax in Guernsey; the amount of this relief will, in most cases, be three-quarters of the effective rate of Guernsey tax and ANY overseas tax which is not relieved by credit will be relieved by deduction. If the overseas effective rate is less than three-quarters of the Guernsey effective rate, relief will be given at the overseas rate.
  
  
• B. Relief for interest on money borrowed
  
  Where any person is required to pay, in respect of money borrowed, any annual interest which cannot be deducted under any provision of the Income Tax Law in computing the income or profits arising or accruing or deemed to arise or accrue to him/her, the said interest may, subject to the provisions of section 38, be deducted from the income or profits which, but for the provisions of the above section , would be assessable to tax.
  
  

Summary of Allowances - Year of Charge: 2003

The Standard Rate of Income Tax is 20p in the £

The Married Person` Allowance is reduced by the amount of any Wife` Earned Income Allowance given:

Note:

• 1. If the relative` income exceeds £5,100 the allowance is reduced by £1 for every £1 by which the relative` income exceeds £5,100
  
• 2. If the relative is a child over the age of 19 years who is receiving full time education, the allowance is reduced by £200 for every month for which a family allowance is payable from 1st January 2003.

Guernsey Income Tax

For the purposes of Guernsey Income Tax, the 'year of charge' is the calendar year beginning on 1 January and ending on 31 December.

For the purposes of income tax, Guernsey and Alderney are treated as if they were one. Consequently, references to 'Guernsey' on this page include Alderney.

To go to the part setting out the rates of tax for the current year and a summary of the personal and other allowances to which an individual resident in Alderney in the current year is entitled.

Residence for the purposes of Income Tax

In order to determine the method of assessment on an individual liable to Guernsey Income Tax it is necessary first to consider that individual's residential status.

An individual who is resident but not principally resident in Alderney is chargeable on his Alderney income, together with the amount of any income remitted to Alderney from outside sources during the year of charge.

An individual who is solely or principally resident in Alderney is chargeable on his total income wherever it arises or accrues.

Residence for the purpose of Guernsey Income Tax is defined in the following extract from the Income Tax (Guernsey) Law, 1975, section 3:

• 1. An individual shall be treated as being resident in Guernsey in a year of charge if he
  
  
• (a) is in Guernsey in the year of charge for a period or periods amounting in all to one hundred and eighty-two days or more; or
  
• (b) is in Guernsey during the twelve months commencing on the first day of August in the year preceding the year of charge and ending in the thirty-first day of July in the year of charge for a period or periods amounting in all to one hundred and eighty-two days or more; or
  
• (c) maintains or has maintained for him in Guernsey a dwelling place for a period or periods amounting in all to ninety-one days or more in the year of charge, and is in Guernsey for the year of charge for a period or periods amounting in all to ninety-one days or more; or
  
• (d) is in Guernsey for any time in the year of charge with the intention of setting up a dwelling place therein, and in that or the following year of charge sets up such a dwelling place; or
  
• (e) having during the four years immediately preceding the year of charge been in Guernsey for a period or for periods amounting in all to three hundred and sixty-five days or more, is in Guernsey at any time during the year of charge, otherwise than on an occasional or casual visit.
  
  
• 2. An individual in a year of charge is resident in Guernsey but is not solely therein:
  
  
• (a) shall be treated as being principally resident in Guernsey if, in the year of charge -
  
  
• (i) he maintains or has maintained for him a dwelling place or a place of business in Guernsey but neither a dwelling place or a place of business elsewhere; or
  
  
• (ii) he maintains or has maintained for him a dwelling place in Guernsey and has taken up permanent residence in Guernsey; or
  
  
• (iii) he neither maintains nor has maintained for him a dwelling place or a place of business in any country but is domiciled in Guernsey;
  
  
• 
  
• (b) shall, in a case to which paragraph (a) of this subsection does not apply, be treated as being principally resident in Guernsey if he appears in view of all circumstances of his case to be so resident, regard being had in particular to his domicile, nationality and habits of life".
  
  
• 3. All income arising or accruing in Guernsey is subject to Guernsey income tax.
  
  
• 4. All income arising or accruing outside Guernsey to an individual who is solely or principally resident in Guernsey, and all income arising or accruing outside Guernsey which is remitted to Guernsey during the year of charge by an individual who is resident but not principally resident in Guernsey is subject to Guernsey income tax but certain reliefs may be obtained as follows:-
  
  
• A . Relief in respect of Double Taxation on income arising in the United Kingdom
  
  There is an agreement for the avoidance of double taxation as between the United Kingdom and Guernsey. Copies of the agreement may be obtained from the Greffe Office, Royal Court House, Guernsey.
  
  The effect of this agreement is that, in the case of any income arising in the United Kingdom which is subject both the United Kingdom income tax and to Guernsey income tax, Double Taxation Relief may be obtained and, in general terms, this relief would equal the amount of Guernsey income tax attributable to such income.
  
  Individuals resident in Guernsey and having income which is subject to tax in the United Kingdom are entitled to claim "Proportionate Allowance" relief from the United Kingdom Inland Revenue. If their United Kingdom income consists of dividends or debenture interest they are entitled to claim Unilateral Relief from the United Kingdom. If their United Kingdom income consists of items other than dividends or debenture interest, claims for relief should, in the first instance, be submitted to the Administrator of Income Tax, Guernsey.
  
  
• B. Relief in respect of Double Taxation on income arising in Jersey
  
  There is an agreement for the avoidance of double taxation as between Jersey and Guernsey. Copies of the agreement may be obtained from the Greffe Office.
  
  The effect of this agreement is that Jersey income tax payable, whether directly or by deduction, in respect of income from sources within Jersey is allowed as a credit against any Guernsey income tax payable in respect of that income.
  
  
• C. Relief in respect of Income Tax paid on other countries
  
  Individuals resident in Guernsey and having income which is subject to tax in other countries, (i.e. other than the United Kingdom and Jersey) are entitled to claim relief from tax in Guernsey; the amount of this relief will, in most cases, be three-quarters the effective rate of Guernsey tax and any overseas tax which is not relieved by credit will be relieved by deduction. If the overseas effective rate is less than three-quarters of the Guernsey effective rate, relief will be given at the overseas rate.
  
  
• 5. Relief for interest on money borrowed
  
  Where any person is required to pay, in respect of money borrowed, any annual interest which cannot be deducted under any provision of this Law in computing the income or profits arising or accruing or deemed to arise or accrue to him, the said interest may, subject to the provisions of this section, be deducted from the income tax or profits which, but for this section, would be assessable to tax.