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Taxation: Isle of Man

Volume 706: debated on Thursday 18 December 2008


Asked by

To ask Her Majesty's Government what are the exceptions to the requirement for tax residents of the United Kingdom to pay tax on their income in the Isle of Man. [HL218]

Tax residents electing to use the remittance basis of taxation do not pay UK tax on their non-UK income unless it is remitted to the UK. Taxpayers are eligible to opt for the remittance basis if they are UK-resident but not domiciled in the UK. In certain circumstances, individuals who are resident and domiciled, but not ordinarily resident, in the UK may also use the remittance basis in respect of overseas employment income.

Asked by

To ask Her Majesty's Government whether the tax information exchange agreement with the Isle of Man includes provisions on the withholding of basic rate tax on deposits made by United Kingdom depositors. [HL219]

The tax information exchange agreement (TIEA) recently signed between the UK and the Isle of Man does not include provisions on withholding tax. TIEAs are focused purely on exchange of information and the UK TIEA with the Isle of Man includes the OECD standard language for transparency and exchange of information on request, which allows the UK to ask the Isle of Man to provide taxpayer information in support of our compliance activities.

The UK has a savings tax agreement with the Isle of Man under the framework of the EU savings directive, which took effect in 2005. This agreement provides for the Isle of Man to apply a withholding tax on savings interest, currently at a rate of 20 per cent, rising to 35 per cent in 2011. Under this agreement the Isle of Man transfers 75 per cent of the revenue raised from the withholding tax to the UK.