Leaving the Island

Have you recently left the Isle of Man or are you perhaps considering this? If so, the following information about income tax may be of help to you.

If you are permanently leaving the island to become resident elsewhere, you need to complete Form R26 – Leaving the Isle of Man – found within the Personal Tax forms. This form asks several questions regarding your intentions, and will enable the Income Tax Division to finalise your Isle of Man resident tax affairs. This form should be completed and returned to the Income Tax Division as soon as possible after leaving the island – see details regarding the ‘Final Resident Tax Return’ below for the importance of an early notification of your intentions.

If you have not already, consider using the Online Tax Services to complete your final tax assessment online.

Final Resident Tax Return

You will be required to submit an income tax return form from 6 April to your date of departure. This return should include all worldwide income received from 6 April until your departure, in the same manner as you completed tax returns previously.

Please note that a return form penalty of £100 will be charged if the return is not submitted within 6 months of your date of departure, with a further £200 penalty charged if the return is not submitted within 12 months of departure.

Your final Resident tax assessment will be issued following the completion of the return form. Please note the personal tax allowance is restricted pro-rata for the time on the island. Where a payment is due, payment is required within 30 days.

Still receiving Isle of Man Income

If you continue to be in receipt of certain Isle of Man sources of income you will still pay Isle of Man income tax and may be required to submit a Non-Resident return form annually. Isle of Man source income may include, but not limited to, Rents, Occupational or Private Pensions (but not the Isle of Man State Pension). Non-Residents are charged at the prescribed higher rate of tax, with no personal tax allowance.

A variety of income is not taxable to Non-Residents, this includes Isle of Man source Bank and Building Society interest, Dividends and the Manx State Pension.

For more information regarding income not taxable to non-residents and for details on how non-resident income tax liabilities are calculated, please refer to Practice Note 130/06. Please note that when the Practice Note was an issued a £2000 personal allowance and tax rate of 18% were in place. Rates and Allowances can change annually. See our current Rates and Allowances for more information.

Isle of Man Pension Income

Some International Double Taxation Agreements allow for income to be charged only in the country you now live, for instance a UK resident receiving an Isle of Man Occupational or Private Pension can apply to not pay Isle of Man Non-Resident Income Tax, only paying tax to UK HMRC. This is country specific and by default the Non-Resident tax rate should be expected for all Isle of Man Occupational or Private Pensions, until an application is completed and accepted. If you think this applies to you, please complete Form R221 – Pension Income – Application for Relief form Isle of Man Tax – found in the Non-Resident Tax Forms. Once completed this form should first be sent to your new tax authorities.

If you wish to find out how an Occupational or Private Pensions will be charged after you leave the island, which will be different for each country, please contact us either by visit, phone or email to our Personal and General Tax Queries team.

For details about changes to your Manx State Pension – please contact Isle of Man Social Security Division.

Temporary leave

If you are leaving the Isle of Man on a temporary basis only, for example, you intend to return to the Isle of Man to reside and are not moving to a new country on a permanent basis, then the Income Tax Division may continue to class you as resident for the period you are absent from the Isle of Man. However, if your period of absence spans a complete tax year (6 April - 5 April) then you may be classed as Non-Resident for that tax year.

If you have any questions or require further help or advice please contact our Personal and General Tax Queries team.