High Value Residents - “1(1)Ks”

The 1(1)K licence given to high net worth individuals derives its name from Jersey's current Housing Law (see Housing).

A key consideration in the granting of 1(1)K licences is the expected level of annual tax contribution to be made by the applicant. To meet the current requirements, applicants would normally be expected to generate sufficient income so that - at the present rates of tax - their annual tax contribution is in the region of £100,000. As part of the application process consideration will be given to the total net worth of the applicant, in order to be satisfied that the applicant has sufficient wealth to generate the expected future tax revenues.

With effect from 1st January 2005, 1(1)K individuals new to the island are taxed on their Jersey source income at 20%. The first £1,000,000 of non-Jersey source income is also taxed at 20%, but the next £500,000 is taxed at 10% and non- Jersey source income above the £1.5 million level is taxed at just 1%.

Non 1(1)Ks

Non-1(1)K individuals do not have to agree a minimum income tax contribution with the authorities. These individuals are subject to Jersey's general income tax rules and will pay tax at a standard rate of just 20% on their worldwide income (including Jersey source income).

In many instances, managers will also benefit from the favourable ‘benefits in kind’ rules that apply for example, to share incentive schemes and proprietary investments in funds managed by them. Generally, any initial benefit obtained when purchasing such shares will be taxable but the subsequent growth in value will be free of Jersey tax. Taken together with the Social Security benefits, this means the tax treatment of such benefits in Jersey is far more attractive than, for example, the UK.

Social Security payments in Jersey are low compared to many jurisdictions. For 2004, the combined employer and employee Social Security payments in Jersey are capped at £4,326 per annum per employee. By way of comparison, at 2004-05 rates, to make a similar sized contribution in the UK, an employee would be typically earning approximately £22,900 per annum. Considerable Social Security savings can therefore be made by moving to Jersey.