Revenue Jersey has sought to reassure taxpayers over fears that they will be charged the default effective rate of tax from next January.
According to Revenue Jersey, delays to tax return assessments have led some taxpayers to worry that they will be put onto the default 21 percent effective tax rate from January 2020 as they have not yet received their tax assessment and with it an updated Income Tax Instalment System (ITIS) effective rate.
Through the ITIS, employers are given a percentage to deduct from their employees’ employment income, which is issued by Revenue Jersey in the form of an ITIS rate. If a taxpayer does not have an effective rate to give to their employer, the employer is legally required to deduct 21 percent.
Revenue Jersey said that effective rates for the year ahead are usually issued to all ITIS-paying taxpayers in November, and that this is happening as normal. 50,000 notices will be issued to taxpayers by December 10, in time for employees to provide details to employers for payroll updates. These rates will be valid for 2020 until the next assessment is completed and revised effective rates are issued as necessary.
Revenue Jersey said that if a taxpayer has not received their 2018 assessment and makes ITIS payments toward their estimated bill for the current year (CYB), their rate will be based on the 2019 earnings data that Revenue Jersey holds from employers. For those without 2018 assessments who make ITIS payments to cover their bill for the previous year (PYB), their 2020 rate will be based on 2017 tax return figures.
People who are self-employed, retired, or have other non-employment income are due to make their second payment on account, for the balance of their 2018 tax bill, by December 6. Revenue Jersey advised that anyone with non-employment income who did not receive their 2018 assessment by October 25 can use a best estimate to make a payment on account by the end of December. Alternatively, they can wait for their tax assessment and pay the balance once they have received it.
Richard Summersgill, the Comptroller of Taxes, said: “We are doing our best to catch up with the late assessments, and we want to reassure taxpayers that they won’t be penalized for the impact of our modernization program. We are taking a flexible approach to applying late penalties this year and will spread any significant ITIS underpayments over next year, to avoid unmanageable increases in ITIS rates for our customers.”