Guernsey tax residency categories are based on the number of days an individual spends on the island.
The number of days is based on the same principle as the UK “midnight test”, where individuals are considered to have spent a day in Guernsey if they are on-island at the end of the day (midnight). As such, days of arrival are counted but days of departure are ignored.
The Guernsey tax year is the calendar year, i.e. January - December. Personal income tax is charged at the flat rate of 20% for individuals, after applying personal allowances and other deductions. The basis on which income tax is charged depends on the taxpayer’s residence status. Further information on these definitions is provided below.
Double taxation/unilateral relief may also apply to any non-Guernsey source income which has already been subject to taxation elsewhere.
Prior to 2023, Guernsey residents were taxed as couples but from January 2023 a new system of Individual Taxation has been introduced meaning that each individual resident will be taxed independently from their spouse or civil partner.
There are a number of categories of residence for Guernsey tax purposes:
Taxation where “Resident only”
An individual is considered to be “resident only” in Guernsey for tax purposes in a calendar year if he is present in one other jurisdiction for 91 days or more, and:
He spends 91 days or more (but less than 182) in Guernsey during the year, or
He spends 35 days or more in Guernsey in that year and, during the four preceding years he spent 365 days or more in Guernsey.
Individuals who are “resident only” are, as an alternative to paying 20% on their worldwide income after relevant personal allowances, able to elect to pay a “standard charge” which is currently set at £40,000. This provides that an individual’s liability on non-Guernsey source income is satisfied by payment of the standard charge and the standard charge “franks” the tax liability on up to £200,000 of Guernsey source income.
If Guernsey source income was to exceed £200,000 further tax would be due as appropriate.
Taxation for those who are “Solely or Principally Resident”
An individual is “solely resident” in Guernsey if they are otherwise “resident only” as detailed above, but they are not also present in one other jurisdiction for the requisite 91 days.
An individual will be treated as “principally resident” in a calendar year if:
He spends at least 182 days in Guernsey during the year, or
He spends at least 91 days in Guernsey during the year and he has spent at least 730 days in Guernsey during the four preceding calendar years, or
He takes up permanent residence in the island, and is “resident only” as defined, is “solely or principally resident” in the following Year of Charge, having not been resident in the preceding year
An individual who is “solely” or “principally resident” in Guernsey is liable to Guernsey income tax on their total worldwide income at a flat rate of 20% after personal allowances and deductions. They can however benefit from tax caps.
An individual who is neither resident only, nor solely or principally resident will generally be considered to be “non-resident” and is broadly only liable to Guernsey income tax on Guernsey source income such as employment or property income. Passive investment income such as Guernsey bank interest is generally not taxable.
Double Tax Treaty & Pensions
Under the terms of the Double Tax Treaty with the UK, pensions are only taxable in the taxpayer’s country of residence. Therefore, for individuals moving to Guernsey from the UK, their UK income tax liability will be replaced by a Guernsey income tax liability and the rate of tax will fall from a maximum of 45%, to 20% providing a DT Individual form is submitted to HMRC.
UK pensions are classed for Guernsey tax purposes as non-Guernsey source income and therefore tax capping may apply in certain circumstances.
Furthermore, as it is non-Guernsey source income, Guernsey tax due on UK pension income is satisfied by payment of the Standard Charge for resident only individuals.
In addition, it is possible for Guernsey residents to transfer UK pensions schemes to a Guernsey scheme.
The information on this web page is provided as a general guide and does not constitute professional tax advice. Further detailed information can also be found on the website of the Guernsey Revenue Service.