Living in Guernsey |

Guernsey provides a high standard of living, with a good education system, stable government, good infrastructure and a convenient location close to the UK and Europe.

Guernsey is an independent self-governing island and is renowned for being a safe place to live with beautiful beaches, scenery and cliff walks.

For many it is surprisingly easy to become a resident of Guernsey. Individuals with a British passport have an automatic right of abode and can immediately buy and live in any of the many fantastic properties available on the “open market”.

Individuals other than British passport holders can also obtain a right to live here and occupy open market accommodation, via an entrepreneur visa depending on circumstances. Generally individuals who can obtain “leave to enter” the UK can also reside in Guernsey on making an application to do so.

Guernsey is a very attractive place to live because of its proximity to the UK and Europe, its safe environment and easy availability of property. In addition to this, the tax system is relatively benign compared to many other jurisdictions.

Tax residency

Guernsey tax residence is based on the number of days an individual spends in the Island. A “day” is treated as being spent in Guernsey if an individual is in the Island at midnight. There are a number of categories of residence for Guernsey tax purposes:

Resident only

An individual is regarded as “resident only” in Guernsey for tax purposes in a calendar year if he is present in one other jurisdiction for 91 days or more, is also present in Guernsey for less than 182 days and:

(a) he spends 91 days or more in Guernsey during the year, or

(b) 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, able to elect to pay a “standard charge”, 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.

Solely Resident or Principally Resident

An individual is solely resident in Guernsey if they are otherwise “Resident Only” as above, save for the fact that 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:

(a) he spends at least 182 days in Guernsey during the year, or

(b) he spends at least 91 days in Guernsey during the year and, during the four preceding calendar years, he has spent at least 730 days in Guernsey, or

(c) he takes up permanent residence in the Island, is resident only as defined and is solely or principally resident in the following Year of Charge.

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 after personal allowances and deductions at a flat rate of 20% unless tax capping applies.

Non-Resident

An individual, who is neither resident only, solely or principally resident will generally 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.

Tax Capping for Guernsey Residents

As a Guernsey resident, it is possible to cap exposure to income tax in Guernsey as an alternative to paying a flat rate of 20%:

- Foreign income tax cap of £160,000 per annum. This is for non-Guernsey source income only. Guernsey source income remains subject to 20% tax. Guernsey bank interest is not considered Guernsey source.

- Annual tax cap of £320,000. This is a global tax cap utilised by individuals with substantial Guernsey source income.

- An open market tax cap of £60,000 per annum is available for up to the first four years of Guernsey residence. In order for the tax cap to apply, an individual must meet the following conditions:

be resident in Guernsey
pay £50,000 or more in document duty, or anti-avoidance duty, in respect of an Open Market property purchased within 12 months before or after becoming resident.

- An Alderney tax cap, available only until 2025, is a maximum of £65,000 in any tax year, under specific conditions.

- An Alderney property tax cap of £60,000 is available for 2025 onward, this mirrors the open market tax cap but applies on the purchase of any Alderney residential property.

Guernsey (including Alderney) source property income and withdrawals from Guernsey pensions, are taxable in addition to the above tax caps.

Double tax treaty and pensions

Under the terms of the Double Tax Treaty with the UK, pensions are only taxable in the taxpayer’s country of residence. For individuals becoming resident in Guernsey, their UK income tax liability will be replaced by a Guernsey income tax liability and the rate of tax will fall from a maximum 45% to 20% providing a Double Taxation application is submitted to HMRC.

Furthermore, as the pension income is non-Guernsey source, Guernsey tax due on the UK pension income is satisfied by payment of the foreign income tax cap or the standard charge for resident only individuals. This often means the effective rate is significantly less than the Guernsey standard rate of 20%.

In addition it is possible for Guernsey residents to transfer UK pension schemes to a Guernsey scheme.

We have described above some of the non-financial reasons for living in Guernsey and in conclusion we believe that the island, with its picturesque beaches, stunning cliffs, winding country lanes and a way of life that echoes of days gone by, offers much more than just a beneficial tax climate. Guernsey is a lifestyle choice for many where the work life balance is very much in focus.

Please refer to our Living in Guernsey factsheet for further information on the Guernsey tax system.

Team

The business employs 12 qualified Chartered Tax Advisers most of whom have years of experience working in both Guernsey and UK tax. The business also employs qualified accountants to assist with its accounting function.