Jersey and Guernsey 2026 budgets

JERSEY AND GUERNSEY 2026 BUDGETS

With Guernsey’s budget due to be debated by the States of Guernsey on 4 November and Jersey’s budget due for debate by the States of Jersey on 9 December, Barry Curtis and Phil Crosby look at what’s proposed in each jurisdiction.

JERSEY PROPOSALS

For Jersey residents there isn’t a lot of change on the horizon.  Income tax thresholds and allowances are expected to change as shown in the following table, and there are routine annual reviews of alcohol and tobacco duties.

As a reminder, all couples who have been taxed on a joint basis with their spouse will be taxed independently from 1 January 2026.  Qualifying couples that wish to continue filing a joint return must elect to do so by 30 September 2026.

Interest deductions on Jersey residential property income

The standout matter that may see significant change relates to interest deductions for Jersey landlords.

Currently interest on loans used to acquire residential property that is rented out on commercial terms is fully deductible against the rental income.  In conjunction with the Jersey government’s drive to address soaring property prices and the growth in volume of properties (particularly flats) being acquired by commercial landlords, the government has undertaken a public consultation on the case for removing the deduction for interest incurred in respect of commercial let residential properties.  

A final decision will rest with Ministers following review of feedback from the consultation and other forecasts.

GUERNSEY PROPOSALS

Turning to Guernsey and there is much more happening.  

Amendment to the definition of a distribution to include loan repayments

Unlike Jersey, Guernsey did not introduce the same degree of mitigation measures when both jurisdictions implemented their zero/ ten tax regimes.  Guernsey’s finances have suffered as a result which is reflected in some of the proposed measures.

Currently, Guernsey residents owning a Guernsey company can make a non-commercial loan to the company and repayments of this loan will follow their legal form and be treated as repayment of capital for tax purposes.

It is proposed that the definition of a distribution for Guernsey tax purposes be expanded to include repayments of non-commercial loans to Guernsey resident shareholders.  This treatment largely mirrors the approach applied for many years in Jersey as an anti-avoidance measure to ensure company profits are subject to taxation no matter how they are ‘distributed’ to shareholders.

However, a big difference between the jurisdictions is that when a Guernsey company makes a distribution (of any form under the new definition of dividends) it must report this to Revenue Guernsey and deduct withholding tax at 20% which it shall pay tax to Revenue Guernsey on behalf of the shareholder.

This is a significant change both for companies and individuals.

Expense deductions on Guernsey let properties

Rather than Guernsey landlords receiving a direct deduction for costs incurred on repairing a rental property (and allowing losses to be carried forward against future rental profits) Guernsey’s current system grants landlords a deduction of 10% or 15% of rental income on furnished and unfurnished property income.  This allowance is restricted so that it cannot create a loss.  Where a landlord still has rental profits after applying the allowance they can claim the Excess Repairs allowance (ERA).  This is calculated as the average expenditure incurred on repairs to the property over the last five years.  Again, this allowance cannot create a loss.  

The 2026 budget proposes that the five-year averaging is scrapped and instead a deduction is allowed for the repair costs actually incurred during the year.  However, this deduction for repairs can still not create a loss to be carried forward.  

The 2026 budget acknowledges that ‘there may be some limited cases where the expenditure in year on repairs may exceed the rental income.’

Goods and Services Tax (GST)

The discussion over Guernsey introducing a GST regime has been running for many years.  Jersey introduced GST in 2008 (initially at 3% and from 2011 at 5%), and it is increasing likely Guernsey will follow suit also with a 5% rate.  Proposals are due to be debated in Q1 2026 to consider various policy measures including whether GST will be applied to food.  Another debate is then expected (either in Q1 or Q2 2026) where the States should make a final decision on GST implementation.    

Personal tax allowances and income tax caps

Personal allowances and supplementary allowances are being increased as shown in the following table.

The withdrawal of the personal allowance will start at £85,000 (2025: £82,500) in line with inflation forecast. and the cap on mortgage interest relief is reduced to £2,500 (from £3,500).

It is proposed Guernsey’s income tax caps will remain at their current levels.
 

RSM Channel Islands offers a range of services which can help navigate the Jersey and Guernsey tax system.  Please get in touch if you think we can help you.

This information is provided for general guidance only and is subject to change.  It is not intended to form advice and should not be relied upon as such.  The application of Jersey and Guernsey’s tax rules can be complex, and professional advice should be sought.