Tax relief

Claiming tax relief

To claim tax relief you will need evidence of payment of the contract premiums. This should be forwarded to the Income Tax Division with your completed return. You should complete the section called Private Medical Insurance with the details of the scheme with your first claim.

If you pay tax through the ITIP scheme on your employment or occupational pension, you should contact the Income Tax Division as soon as you start paying premiums so that your code can be altered to give you tax relief immediately. You will be asked to give full details of the insured person and the name of the scheme and provider.

Deductions

As an Isle of Man resident tax payer, you are entitled to claim certain deductions when you submit your tax return. Provided the Income Tax Division have all the information required to assess your position, these amounts will be used to reduce your tax liability.

Some examples of current allowable deductions are:

  • Mortgage Interest (subject to certain limits)
  • Loan Interest (subject to certain limits)
  • Superannuation
  • Professional Subscriptions
  • Personal Pension Contributions
  • Charitable Deed of Covenant
  • Charitable donations

Certain deductions are subject to limits and restrictions and any relief granted must be within these set parameters and conditions. For example, with effect from 6 April 2017, the maximum amount of mortgage and loan interest for which a single person can claim tax relief is £5,000.

Relief for certain general deductions is restricted to the lower tax rate of 10% and the tax relief will be treated as reducing an individual's total income tax liability. The general deductions affected are: interest paid on mortgages or loans; charitable donations or deeds of covenant; private medical insurance payments; and nursing expenses.  In the example above, relating to mortgage and loan interest paid, relief of £500 will be available to reduce the individual's total tax liability.

Before deductions can be granted you will need to provide certain evidence to the Income Tax Division that you have paid the amounts you are claiming. For example, if you claim mortgage or loan interest relief, your lender will send you a certificate of interest paid for the year - this should then be submitted with your return.

Additional allowances

Additional personal allowances are available for:

Further details regarding deductions and additional allowances and how to claim them can be found in the return form guides GN1 and GN1S.

Contracts

Contracts are eligible for tax relief only if it provides cover for a person aged 60 years or over; or a jointly assessed couple where at least one of the partners is aged 60 years or over. The contract should provide cover for medical or surgical treatment given or supervised by a qualified medical or dental practitioner.

A contract will not be eligible if it provides any of the following items:

  1. Cash benefits in excess of £100 per night while undergoing treatment in a hospital bed
  2. Dental treatment carried out by a general dental practice
  3. Eye tests and other eye treatments not carried out in a hospital
  4. Plastic surgery carried out for cosmetic reasons (i.e. a facelift)
  5. Policies that provide cash payments for loss of limbs or dismemberment
  6. Schemes that provide cash benefits only

It may be possible to transfer an existing contract that is not eligible to an eligible scheme. You should contact your insurance provider for advice. If you have a family contract which is not eligible, you may be able to separately insure the parties to benefit from eligible schemes for those of the appropriate age.

If you have an existing contract but the insured parties are not yet age 60, it may become eligible when they reach that age. It will depend on the cover provided and all the previously mentioned conditions and any new conditions that may be brought in as to whether it will be eligible. If an existing contract becomes eligible on the insured reaching age 60, you will get tax relief on all premiums paid after their 60th birthday.

Private medical insurance

Private Medical Insurance qualifies for tax relief provided it meets certain criteria - you must be resident in the Isle of Man for tax purposes and pay the premiums on an eligible contract. The contract must insure either you or a tax resident relative or friend. The insured person must be at least 60 years old, or if the insured are a jointly assessed couple, then one partner must be at least 60 years old.

The maximum deduction for private medical insurance premiums is limited to £1,800 per person per annum or £3,600 for jointly assessed couples where both partners are insured and at least one partner is aged 60 years or over. From 6 April 2012, the tax relief for private medical insurance premiums is granted at 10%. There is no limit to the number of policies that you pay, as long as they are eligible.

Life insurance premiums

Tax relief for life insurance premiums was abolished with effect from 6 April 2008. Any premiums paid before 5 April 2008 will receive tax relief in the tax year in which they were paid.