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Non-Residents

What difference does it make whether an employee normally lives in the Isle of Man or not?

An individual who is not resident in the Isle of Man for tax purposes is entitled to a non-resident allowance and all remuneration over and above the allowance must be taxed at the higher rate (HR).

How do I know whether a person is resident or non-resident?

This can be very difficult to determine and, therefore, if you have any doubt you must contact the Income Tax Division for advice.

What Tax Code should I use for a non-resident employee working in the Isle of Man?

The current year's emergency code for non-residents should be implemented. The balance after free pay must be taxed at the higher rate.

For employees physically present in the Isle of Man, but considered to be non-resident for income tax purposes, the emergency code to be adopted is Code 424N. This does not apply to the payment of directors' fees, consultancy fees and other remuneration in respect of professional services, for which Code HR must be used. Non-resident individuals in receipt of a pension (other than a State Pension paid by the Department of Health and Social Security) should have Code 204N applied against their gross pension.

Should I deduct tax from fees paid to non-resident directors?

Director's fees paid to a non-resident director will not be subject to ITIP deductions provided that the director's duties are performed wholly outside the Isle of Man, or that the fees are in respect of statutory functions performed with the Isle of Man.

What do I do if an employee stays longer than intended?

For employees who had originally not intended to stay on the Island for longer than 182 days but then stay in excess of that period, submit Form T20 inserting the actual date of commencement of employment.

I have a non-resident employee who performs part of the duties in the Isle of Man and the remainder in another country. Must I deduct tax from the whole of the remuneration?

Though only part of the duties may be performed in the Isle of Man, tax must be accounted for on the whole of the remuneration i.e. after a proportion of the personal allowances.

Employees who spend most of their time abroad over a period of a year or more (for example visiting the Isle of Man only for one day per month for a meeting) may not be required to have any tax accounted for on their remuneration. Prior clearance from the Income Tax Division must be obtained in all such cases.

How do I pay non-resident income tax?

You should include all the ITIP deducted from non-residents on the Remittance Card (T35) which is submitted on a monthly basis.

I am an employer in the Tourist Industry and some of my employees are non-resident seasonal workers. How should I treat them?

Forms T20 and T21 are not required for this category of employee. The current emergency code for non-residents should be implemented. For employees physically present in the Isle of Man, but considered to be non-resident for income tax purposes, the emergency code to be adopted is Code 424N.

Do I need to submit Forms T14 in respect of non-residents?

Yes. A form 14 must be completed and submitted as normal with the Employer's Annual Return. No tax reference number should be used in these cases. However, the words 'non-resident' should be inserted in the boxes reserved for the tax reference number.