Jersey: Review Of Jersey Property Taxation

Last Updated: 15 September 2014
Article by Tim Hart

If the former US Vice President Dick Cheney is to be believed, "people don‟t give a damn about tax reform". This is unlikely, however, to be true of the Treasury Minister‟s recently published Property Tax Review Green Paper. Given the range and importance of the review for Jersey households and players in the local property industry, the public consultation is open to responses until the end of 2014.

The Green Paper, which draws upon a review prepared for the Minister by PwC LLP, stresses that the purpose of the review is not to raise additional revenue. It is about putting the property tax system on a sound footing by identifying principles to help shape development of a modern, efficient, coherent property tax system.


The Green Paper sets out 6 principles identified in the PwC review to inform deliberations as to potential reforms:

  1. Wide and transparent consultation.
  2. Coherence and certainty - A reformed property tax system should fit with existing taxation principles and established legal concepts; taxes should be easy to calculate and based on transparent and up-to-date valuations.
  3. Support for efficiency and growth - "The choice of property tax instruments should favour economically efficient taxes such as recurrent taxes on land and residential property over taxes that distort behaviour such as stamp duties."
  4. Support for the competitive environment - Where possible, property taxes should support and encourage inward investment.
  5. Fairness - Taxes should be balanced in their incidence, be based on up-to-date information, reflect the ability of taxpayers to pay and be readily collectable.
  6. Fiscal sustainability and sustainability - A property tax system must be designed to improve macro-fiscal management, with particular regard to the level of debt and dampening volatility of tax receipts.

Against this background, the Green Paper explores the potential for reform in certain areas of property taxation.


The Green Paper considers whether the current rates system could be modernised and broadened in scope. As noted above, recurrent property taxes are regarded as economically efficient and furthermore support the objective of reducing volatility of tax receipts.

Various options are canvassed for both residential property and commercial property, involving in the former case either changes to the rates system or a new annual property tax and in the latter case an annual property tax.


The concept here is that the public should share by means of taxation in uplifts in property values attributable to the performance of the economy and other factors created by the public.

The Green Paper considers potential options:

  • Taxing profits over and above the initial cost of a property as increased to reflect a normal‟ rate of return.
  • Taxing development gains namely uplifts in land values based on the grant of change of use permission or the re-zoning of the land for the purposes of the Island Plan. It is conceded that there are practical and technical obstacles and that "no territory that we are aware of has ever successfully implemented a tax of this type".
  • Introducing a scheme similar to the UK Community Infrastructure Levy.


Further gradual restriction of mortgage interest tax relief (MITR) is canvassed. It is made clear, however, that neither the abrupt withdrawal of MITR nor the restriction of MITR to current borrowers only is being proposed.

The rules in relation to interest tax relief for commercial landlords are also to be reviewed. A possible basis of reform would be to prescribe in law the proportion of the gross rental of a property on which a landlord would be required to pay tax. The actual amount to be paid by the landlord by way of tax would then be the greater of (a) the amount calculated under the current rules and (b) the prescribed proportion of the gross rental.


A full review of stamp duty and LTT is envisaged, with a view to rationalising and modernising it. Potential reforms could include:

  • reducing rates or increasing bands;
  • abolishing stamp duty on mortgages; and,
  • introducing reliefs for transfers between connected parties.


Studying the Green Paper and participating in the consultation process is strongly recommended. Full details can be found on the Consultations page of the States website ( The consultation process closes on 31 December 2014 and a summary of responses is to be published in Spring 2015, together with an indication of how the Treasury Minister intends to proceed.

Article first published in Business Brief, September 2014

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.

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