Isle of Man: Financial Review – April 2010

Island’s Finance Sector Confident for the Year Ahead
Last Updated: 18 April 2010


In his last budget before moving to head up the new Department for Economic Development, Treasury Minister Allan Bell MHK showed the Isle of Man Government had risen to the challenge of its revenue shortfall, and adapted to ensure the Island remains an attractive place to do business.

The Budget was prepared against a backdrop of the worst global economic situation seen in the past 60 years, and is positioned to allow the Island to compete strongly and to maintain the attractiveness of the Isle of Man to inward investment.

Minister Bell put forward a Budget for 'change' that combined lower public spending, limited increases in taxation and the strategic use of reserves. The Budget he set out was the first instalment of a five-year strategy to rebalance the Government's finances following the reduction in the Island's share of VAT income from its union with the UK.

The Treasury Minister explained, "This is a Budget that paves the way for change while maintaining support for the least well off in our society. There are further and greater challenges ahead, but we now have a clear plan to manage the transition to a new era of Government fit for the future."

In many ways the challenge has been lessened because of the success the Island has enjoyed in recent times. The 26 years of unbroken economic growth, record levels of investment in public services and infrastructure have contributed significantly to the Island's economy, making it stronger and more diverse than in any previous slow-down. This puts the Island in a comparatively strong position, as does its ability to draw from reserves.

The Minister continued, "The Isle of Man is not alone in facing fiscal difficulties and we are in a relatively strong position. Our economy is still healthy and we are a resilient and resourceful small nation with a track record of working together when faced with changing circumstances.

"Our ability to deal with such challenges was illustrated when Standard and Poor's recently confirmed the Island's 'AAA' credit rating, commenting that the Government's robust financial position will enable it to deal with the ongoing budgetary and economic pressures" he said.

Another key aspect of the Government's strategy has been to announce proposals for a major restructuring of Government Departments with a focus on growing the economy to generate new income for the Island through the creation of the Department of Economic Development.

Minister Bell said, "The Budget is part of a wider work in progress. Members of Tynwald recently approved proposals for a major restructuring of Government Departments, with attention focused on generating new revenue streams."

Under the new plan, Government functions have been reorganised under nine Departments, six of which are entirely new and will become effective on April 1.

The Chief Executive Officer for the new Department of Economic Development will be Colin Kniveton, who will take responsibility for securing more inward investment and further diversification of the Island's economy.

Budget at a Glance

  • Income tax personal allowances increased by 1% to £9,300 for single persons and £18,600 for married couples.
  • Personal income tax standard rate stays at 10%, with the higher rate increasing by 2% to 20%.
  • Tax cap on total income tax payable per person increased to £115,000 or £230,000 per married couple.
  • Thresholds at which higher rate becomes payable remain at:
  • Single Person remains at £10,500 of taxable income;
  • Married Couple remains at £21,000 of taxable income, fully transferable between husband and wife;


The Isle of Man Government is placing greater emphasis on growing the economy as it seeks to enhance its status as a leading international business centre.

The challenge of bringing together various economic strands of Government under the control of one Department is being spearheaded by Allan Bell MHK, who has been appointed as the new Minister for Economic Development.

Mr Bell brings a wealth of experience to this important new position having served as an MHK for 24 years – the last nine as Treasury Minister.

"The creation of a Department of Economic Development is a further milestone in the Isle of Man's progress as a leading centre for international business," the Minister said.

"The finance industry has been the cornerstone of our economic success in recent years and I look forward to continuing my close working relationship with the private sector in an effort to stimulate further growth.

"This fresh drive for new business and new revenue is particularly important in the current fiscal climate."

The departmental changes are a core element of the Island's plans to manage a period of financial transition following the revision of the VAT sharing arrangements with the United Kingdom. Other measures designed to tackle the shortfall in public revenues include lower public spending, moderate increases in taxation and the limited use of reserves.

This restructuring represents the most comprehensive overhaul of Government since the introduction of the Ministerial system in 1986. It is being viewed as an opportunity to drive forward greater efficiencies aimed at helping the Island to emerge leaner, fitter and even better equipped to face the challenges of the future.

The Island is entering this period of fiscal readjustment on a firm footing, with low unemployment, no external borrowing, sound reserves and a solid reputation as a centre for international business.

The Isle of Man economy, while not immune to the fall-out of the worldwide downturn, has responded positively to changes in the international environment and is expected to have grown by 2.5% during the 2009-2010 financial year.

Economic diversity continues to provide great strength and resilience, with emerging sectors such as e-business, space commerce and the shipping and aircraft registries helping to stimulate new business and employment.

Driving forward this strategy of diversification is high on the agenda of the Department of Economic Development as it builds on the Island's record of 26 years of unbroken economic growth.

Economic Development Chief Executive Colin Kniveton said: "Maintaining the positive working relationship between Government and private enterprise will be paramount to the creation of new niche sectors to sit alongside the more well-established income generating industries.

"This spirit of co-operation has helped to deliver the resounding economic success of the last two decades – a period in which the Island's GDP has increased fourfold in real terms.

"I am confident that we will not only cope with the fiscal challenges that lie ahead, but that the Isle of Man will continue to provide a world-class, business-friendly environment that meets global standards on financial regulation and taxation."

That optimism appears to be shared by the Island's business community with more than two thirds (69%) of companies taking part in a recent survey saying that they expected to grow over the next 12 months.

Harnessing this potential for growth will be one of the main priorities for the Department of Economic Development. Minister Bell said:

"I am looking forward to bringing together the income generating strands of the economy to help safeguard the future prosperity of the Island.

"The partnership between the Government and private sector is a positive one and I am confident that we can continue to work closely to ensure the Island emerges from this period of global uncertainty in a position of strength."


A recent survey of business leaders from Isle of Man based financial and professional services companies revealed confidence levels on the Isle of Man remain strong despite global economic uncertainty and pressures facing finance centres from the international community.

Almost three quarters of financial and professional services businesses admitted they had seen a reduction in turnover since the start of the recession, but looking to the year ahead, almost three quarters of companies said they expected to grow over the next 12 months.

A fifth of those companies expect to grow substantially, and nine out of 10 firms said they expect to post a profit in the next financial year, revealing there is a light at the end of the tunnel for the Island's finance sector.

Minister, for the Department of Economic Development, Allan Bell MHK, said, "Following a difficult year for financial services across the world, it is encouraging to see that the Island's finance sector is remaining resilient and positive for the year ahead.

"The finance sector's optimism is enabled by the talent and adaptability of the businesses on the Island. In addition, our commitment to transparency and meeting the highest standards of international regulation has created the right environment for our finance sector, which is reflected in our OECD white listing as a leading financial centre in transparency and cooperation. The Island recently received positive endorsements from the IMF and Foot Review and has retained its triple AAA rating from S&P, meaning the Isle of Man is still a great place to do business."

Over half of the Island's finance companies do not see themselves taking any cost cutting measures over the next year. For those that expect to reduce outgoings, it appears the focus will be on 'people costs' with salaries and day-to-day expenses such as travel and entertainment being the main areas businesses would look to cut back on if necessary, rather than more severe cost cutting measures that have been a mark of the global recession in 2009.

Steven Beevers, Deputy Director Isle of Man Finance, said, "It is a positive sign that so many companies do not envisage taking any cost cutting measures this year, and those that do are primarily considering cutting basic day to day costs if necessary. This survey is a strong indication that businesses in the Island's finance sector are confident about the future."


Isle of Man Philanthropist, Albert Gubay's has publicly thanked the Isle of Man Government for its help in creating The Albert Gubay Charitable Foundation.

Having made provision for his family, Albert Gubay has spent recent years organising his affairs so that on his death the companies he has built up can be left intact to the charity. The companies in question could already be worth £800 million but he is determined that the end result will be a £1 billion charity that could generate annual income for good causes of at least £20 million.

The charity trustees have already received the bulk of his wealth, and he now has the comfort of knowing that he has started the process that will lead to the fulfilment of his charitable ambitions. In the meantime he continues to work hard on behalf of the trustees to grow the fund that will end up in the charity.

Albert Gubay believes that it is the Isle of Man's new private charity regime that has allowed him the freedom to base the Foundation in the Isle of Man.

The Island was already an attractive location for the establishment of charities, being well regulated, with a good professional and financial infrastructure and with licensed organisations who are used to managing large complex financial arrangements. However, as in other jurisdictions a perceived disadvantage for privately funded philanthropic arrangements can be the degree of regulation attached to charitable status.

Albert Gubay wanted to base his charity in the Isle of Man and to protect potential beneficiaries he wanted it properly regulated. However, some aspects of existing charity regulation did not seem appropriate for privately funded arrangements.

The Isle of Man's response was the introduction of the Charities (Exemption) Regulations 2008. This new regime does require the approval of the charity and ensures that the legitimate concerns of regulators and potential beneficiaries are met without, for example, the public filing of accounts or potentially onerous investigations into investments.

For a charity to be approved under the new regime, it must meet the following key tests.

  1. The initial funds must originate from named persons who must be clearly identified to the Attorney General.
  2. The name of the institution must be approved by the Attorney General.
  3. The governing instrument must be approved by the Attorney General and in broad terms must incorporate the following elements.
    1. No further funds can be solicited or received from any person other than the original donor, and certain persons connected with the donor.
    2. The majority of the trustees or directors must be resident in the Isle of Man and all meetings of the trustees, or directors must take place in the Isle of Man.
    3. A trustee or director who is regulated under the Corporate and Trust Service Provider licensing regime must be appointed to accept service of notices and other documents.
    4. The Attorney General must be notified of certain trustee appointments.
    5. Each year audited accounts must be sent to the Attorney General, together with a certificate confirming compliance with the provisions of the governing instrument.
    6. Certain amendments require the prior approval of the Attorney General.

The new Isle of Man regime is aimed at wealthy individuals who want to fund a charitable arrangement which will not collect further funds from the public. It will be particularly attractive to individuals who do not need relief from estate taxation in respect of the funds passing to the charity. This may be where the estate of the individual or the trust that will fund the charity are in any case outside the scope of estate taxation.

Albert Gubay's charity was the first to be approved under the new regulations, but it seems likely that the regime will attract other privately funded charities to the Isle of Man.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on

Click to Login as an existing user or Register so you can print this article.

In association with
Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:
  • To allow you to personalize the Mondaq websites you are visiting.
  • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our information providers who provide information free for your use.
  • Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.
    If you do not want us to provide your name and email address you may opt out by clicking here
    If you do not wish to receive any future announcements of products and services offered by Mondaq you may opt out by clicking here

    Terms & Conditions and Privacy Statement (the Website) is owned and managed by Mondaq Ltd and as a user you are granted a non-exclusive, revocable license to access the Website under its terms and conditions of use. Your use of the Website constitutes your agreement to the following terms and conditions of use. Mondaq Ltd may terminate your use of the Website if you are in breach of these terms and conditions or if Mondaq Ltd decides to terminate your license of use for whatever reason.

    Use of

    You may use the Website but are required to register as a user if you wish to read the full text of the content and articles available (the Content). You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these terms & conditions or with the prior written consent of Mondaq Ltd. You may not use electronic or other means to extract details or information about’s content, users or contributors in order to offer them any services or products which compete directly or indirectly with Mondaq Ltd’s services and products.


    Mondaq Ltd and/or its respective suppliers make no representations about the suitability of the information contained in the documents and related graphics published on this server for any purpose. All such documents and related graphics are provided "as is" without warranty of any kind. Mondaq Ltd and/or its respective suppliers hereby disclaim all warranties and conditions with regard to this information, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Mondaq Ltd and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use or performance of information available from this server.

    The documents and related graphics published on this server could include technical inaccuracies or typographical errors. Changes are periodically added to the information herein. Mondaq Ltd and/or its respective suppliers may make improvements and/or changes in the product(s) and/or the program(s) described herein at any time.


    Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:

    • To allow you to personalize the Mondaq websites you are visiting.
    • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
    • To produce demographic feedback for our information providers who provide information free for your use.

    Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.

    Information Collection and Use

    We require site users to register with Mondaq (and its affiliate sites) to view the free information on the site. We also collect information from our users at several different points on the websites: this is so that we can customise the sites according to individual usage, provide 'session-aware' functionality, and ensure that content is acquired and developed appropriately. This gives us an overall picture of our user profiles, which in turn shows to our Editorial Contributors the type of person they are reaching by posting articles on Mondaq (and its affiliate sites) – meaning more free content for registered users.

    We are only able to provide the material on the Mondaq (and its affiliate sites) site free to site visitors because we can pass on information about the pages that users are viewing and the personal information users provide to us (e.g. email addresses) to reputable contributing firms such as law firms who author those pages. We do not sell or rent information to anyone else other than the authors of those pages, who may change from time to time. Should you wish us not to disclose your details to any of these parties, please tick the box above or tick the box marked "Opt out of Registration Information Disclosure" on the Your Profile page. We and our author organisations may only contact you via email or other means if you allow us to do so. Users can opt out of contact when they register on the site, or send an email to with “no disclosure” in the subject heading

    Mondaq News Alerts

    In order to receive Mondaq News Alerts, users have to complete a separate registration form. This is a personalised service where users choose regions and topics of interest and we send it only to those users who have requested it. Users can stop receiving these Alerts by going to the Mondaq News Alerts page and deselecting all interest areas. In the same way users can amend their personal preferences to add or remove subject areas.


    A cookie is a small text file written to a user’s hard drive that contains an identifying user number. The cookies do not contain any personal information about users. We use the cookie so users do not have to log in every time they use the service and the cookie will automatically expire if you do not visit the Mondaq website (or its affiliate sites) for 12 months. We also use the cookie to personalise a user's experience of the site (for example to show information specific to a user's region). As the Mondaq sites are fully personalised and cookies are essential to its core technology the site will function unpredictably with browsers that do not support cookies - or where cookies are disabled (in these circumstances we advise you to attempt to locate the information you require elsewhere on the web). However if you are concerned about the presence of a Mondaq cookie on your machine you can also choose to expire the cookie immediately (remove it) by selecting the 'Log Off' menu option as the last thing you do when you use the site.

    Some of our business partners may use cookies on our site (for example, advertisers). However, we have no access to or control over these cookies and we are not aware of any at present that do so.

    Log Files

    We use IP addresses to analyse trends, administer the site, track movement, and gather broad demographic information for aggregate use. IP addresses are not linked to personally identifiable information.


    This web site contains links to other sites. Please be aware that Mondaq (or its affiliate sites) are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of these third party sites. This privacy statement applies solely to information collected by this Web site.

    Surveys & Contests

    From time-to-time our site requests information from users via surveys or contests. Participation in these surveys or contests is completely voluntary and the user therefore has a choice whether or not to disclose any information requested. Information requested may include contact information (such as name and delivery address), and demographic information (such as postcode, age level). Contact information will be used to notify the winners and award prizes. Survey information will be used for purposes of monitoring or improving the functionality of the site.


    If a user elects to use our referral service for informing a friend about our site, we ask them for the friend’s name and email address. Mondaq stores this information and may contact the friend to invite them to register with Mondaq, but they will not be contacted more than once. The friend may contact Mondaq to request the removal of this information from our database.


    From time to time Mondaq may send you emails promoting Mondaq services including new services. You may opt out of receiving such emails by clicking below.

    *** If you do not wish to receive any future announcements of services offered by Mondaq you may opt out by clicking here .


    This website takes every reasonable precaution to protect our users’ information. When users submit sensitive information via the website, your information is protected using firewalls and other security technology. If you have any questions about the security at our website, you can send an email to

    Correcting/Updating Personal Information

    If a user’s personally identifiable information changes (such as postcode), or if a user no longer desires our service, we will endeavour to provide a way to correct, update or remove that user’s personal data provided to us. This can usually be done at the “Your Profile” page or by sending an email to

    Notification of Changes

    If we decide to change our Terms & Conditions or Privacy Policy, we will post those changes on our site so our users are always aware of what information we collect, how we use it, and under what circumstances, if any, we disclose it. If at any point we decide to use personally identifiable information in a manner different from that stated at the time it was collected, we will notify users by way of an email. Users will have a choice as to whether or not we use their information in this different manner. We will use information in accordance with the privacy policy under which the information was collected.

    How to contact Mondaq

    You can contact us with comments or queries at

    If for some reason you believe Mondaq Ltd. has not adhered to these principles, please notify us by e-mail at and we will use commercially reasonable efforts to determine and correct the problem promptly.

    By clicking Register you state you have read and agree to our Terms and Conditions