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Budget 2024’s vision for a financially sustainable future

Tuesday, 20 February 2024

Sustainable finances and long-term stability were the key themes when Treasury Minister Dr Alex Allinson MHK unveiled his second Budget in Tynwald this morning (Tuesday 20 February).

Minister Allinson committed to invest in healthcare, education and frontline services in support of the aims of Our Island Plan, while laying out a robust five-year strategy and future proposals to strengthen the Island’s fiscal resilience.

Acknowledging the challenges posed by a three-year period of global economic uncertainty, Dr Allinson looked forward with confidence while pointing to the need for pragmatism and a long-term view.

He said:

‘This Island’s ongoing ability to thrive in a tough economic climate and to have sufficient strength to respond to shocks is of vital long-term importance and why, Mr President, now perhaps more than ever it is essential that we have a financially sustainable budget for our future.

‘This budget provides continuing increased investment in our core services, health and social care, education and infrastructure; the maintenance of which are vital for ensuring we remain an attractive place to live and work — a key element of Our Island Plan and Economic Strategy.’

Government revenue spending for 2024-25 is budgeted at £1.3 billion, representing £16,343 for every person on the Island.

Health and education were at the centre of the day’s announcements with an additional combined total of more than £59 million being allocated to their respective departmental budgets compared to the start of 2023-24.

The Department of Health and Social Care will be provided with a significant increase of £41.2m, which includes funding to help Manx Care fulfil its mandate. To support ongoing investment, a long-term financial plan will see the DHSC’s annual expenditure budget gradually increase before topping £400m in 2028-29, which includes increases to the Manx Care mandate in line with the conclusions of the independent report by Sir Jonathan Michael in 2019.

Department of Education, Sport and Culture funding will rise by over £18m to stand at more than £141m. A total of £3m is being committed to support the initial rollout of the Childcare Strategy, with £35m available over five years. The Treasury Minister told Members:

‘We are currently working with the childcare sector to see how a phased approach can be used to extend the existing pre-school credit scheme to 3 to 4 year olds and support the sector to develop and provide more accessibility.’

A recent announcement around accelerating the development of Castle Rushen High School through funding from the Project Development Fund is supported within the capital programme; and contingency funding to be held by the department of £350,000 is being made available to assist the regional swimming pools.

All departments will see increases to their budgets which have been rebased to take account of inflationary pressures and pay-related costs — Infrastructure will receive an additional £7.2m, Cabinet Office £4.6m, Home Affairs £4.2m, Treasury £3.3m, Enterprise £1.3m and Environment, Food and Agriculture £1.3m.

Income tax rise ring-fenced to support delivery of healthcare

The higher rate of personal income tax will rise from 20% to 22% in April, with the additional income — forecast to be worth up to £20m — being ring-fenced for the Island’s healthcare services.

Announcing the measure as part of the Isle of Man Government’s Budget package ahead of the new financial year, the Treasury Minister referred to a forthcoming Tax Strategy that will be presented for discussion by Tynwald Members at next month’s sitting. The strategy proposes the introduction of a standalone annual NHS levy, which would aim to replace the tax increase.

The Treasury Minister said:

‘Although our income tax receipts have been strong and are currently forecast to be in excess of £320 million, there still remains a gap in healthcare funding which must be addressed now and for the future.

‘After exploring my options for a balanced budget, I have made the decision to increase the higher rate of income tax from 20% to 22% and ring-fence this extra income to support our NHS.’

He added:

‘I intend to lead a debate on [the Tax Strategy] next month and work with Members to investigate bringing forward a new 'NHS levy' which could then replace this increase in the upper rate of Income Tax and lead to a fairer way that all those in our community could help fund the healthcare system they rely on.

‘It is my ambition to introduce the levy from the 2025-26 income tax year and therefore the necessary legislation will need to be brought forward prior to this.’

The income tax personal allowance remains at £14,500 for individuals and £29,000 for jointly assessed couples, and the 10% band stays fixed at £6,500.

Company tax on some banks and large retailers will be increased, from 10% to 15%, raising income to further support and prioritise the delivery of essential services for our community.

A Petroleum Extraction Tax will also be brought forward, with the Isle of Man Government taxing income from petroleum operations in the Island, including its territorial sea, at a 20% rate from April.

Turning to National Insurance, Minister Allinson said:

‘Last year Treasury published the report by the UK Government Actuary into the operation of the Manx National Insurance Fund — it showed that if no action was taken the Fund would be exhausted by 2047/48. I have therefore asked Treasury to complete a review into the operation of the fund so that we can ensure that it remains fit for purpose.

‘This review looks at the size of the fund, how it should be invested and what part it should play in supporting the costs of our health service. The review will also look at the expenditure from the fund of which the most significant is the state retirement pension.’

Changes to NI this year include:

  • the primary and secondary thresholds for Class 1 contributions and the lower profit limit for Class 4 National Insurance contributions increasing by 10% to £160 per week

  • the upper earnings limit for Class 1 contributions and the upper profits limit for Class 4 contributions increasing by 8.5% to £938 per week

  • Class 2 and Class 3 contributions increasing by 8.5% to £6.20 and £18.95 respectively

The National Insurance Holiday Scheme will continue for a further year.


Most benefits will rise by 6.7% or 5.7% in line with either the UK or Isle of Man CPI rate at September 2023. The Treasury Minister said:

‘We are allocating an additional £29.3 million budget to our pensioners and recipients of other benefits, supporting families, those who are in times of need and the elderly.’

Maternity, paternity and adoption allowances will each increase by 15%, building on last year’s 16.8% rise.

A further boost for families will see the child benefit rate for a second child and subsequent children being increased to the same level as that received for the first child. Including a 5.7% inflationary uplift, this measure is forecast to cost £2.36m and will help around 3,000 families.

Pensioners will continue to benefit from the triple-lock arrangement for the forthcoming year, with the basic state retirement pension and Manx state pension seeing an uplift of 8.5%.

Internal funds

Investment in projects and initiatives in support of Our Island Plan will be enabled through injections to existing funds focussing on Healthcare Transformation, Project Development, Agriculture and Forestry, and the work of the Housing and Communities Board.

The Climate Change Fund will preserve its current total of £25.7m unallocated funding for the forthcoming year, ready to assist Departments in meeting the Isle of Man Government's net zero carbon emissions target by 2050.

Similarly, the Economic Strategy Fund will retain £47.9m of unallocated funds to support the development of infrastructure and services for an estimated population of 100,000 by 2037.


A capital programme commits more than £274.7m over the next five years to deliver approved Central Government schemes and progress the aims of Our Island Plan.

An allocation of £3.2m has been made from the Project Development Fund to support plans to replace Castle Rushen High School. The Treasury Minister told Members:

‘We are accelerating the design stages and appointing additional specialist advisers to lead on this major investment. Clear communication and engagement with the communities in the South is key to this project and it is planned to present further details to them in the coming months.’ 

Funding in this year’s programme also includes £10m for climate change mitigation and adaption projects, £1.5m to undertake work at Isle of Man Airport and an additional £600,000 for improvements to Ramsey Shipyard.

Investment in the Island’s highway network will see £6.125m committed to improvements and refurbishment as part of a rolling scheme, while an additional £1.155m will be available for structural maintenance.

Five-year plan

The five-year financial plan continues to rely on transfers from general reserves to bridge the gap between income and expenditure, to support Government activities and stimulate the economy. Withdrawals are, however, planned to reduce as Government establishes ways to broaden its income base and increase revenue through the successful delivery of the Economic Strategy.

The Treasury Minister said:

‘The impact of rising wages in the private and public sector has increased our Income Tax receipts and these are expected to be around £48 million higher than budget by the end of the year.

‘These additional receipts combined with a significant reduction on internal fund expenditure mean that despite the increased costs incurred by Departments we are able to reduce the planned drawdown from our reserves for this year from £152.9m to £126.5m. This is still a substantial amount, but nevertheless, it is lower than planned due to the application of financial discipline.’

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