How do we stop our best and brightest talent being drawn away by the sirens of tax-free employment abroad That’s the question employers should be asking themselves right now.
With things like a possible no-deal Brexit on the horizon, living and working in the UK isn’t going to get any more tempting, so what’s a business owner to do?
As an employer, you’re probably well versed in the new language of communicating work perks to potential employees. But are ‘cycle to work’ schemes and free lunches ever enough” With the likes of the UAE offering employees the chance to take as much as 100% of their earnings home with them, perhaps not.
UK based employers have to step up their recruitment game if they want to tempt the most talented and ambitious employees in ‘the pool’ to stay on these spectred shores.
But how” The mainland UK tax system is as rigid as they come. But if nimble employers want to take their business in a different direction, and perhaps, a slightly different location to ensure their employees take home more pay, they can. Furthermore, the location in question is not on the other side of the world, it’s just off the British mainland, it’s the Isle of Man.
The Isle of Man, you don’t have to travel far to take home more pay
The Isle of Man, whilst not part of the UK, is what is known as a ‘crown dependency’, just as the channel islands of Guernsey and Jersey are to the UK. Its independentAdministration allows for its differing tax structure, however, its residents are classified as British. Now, before we go into an Isle of Man history lesson, (I’ll spare you my schoolgirl”Manx), The Isle of Man has just announced National Insurance Holiday Scheme for new and returning residents, which will mean they can take home more pay than their UK counterparts.
What is this new scheme
Under the new scheme, eligible employees on a gross income of £30,000 would take home £27,450, compared to the £23,800 they would take home if they were working in the UK.
But the Isle of Man as an employment ecosystem is already a more lucrative place to work than the UK even before this scheme was introduced. Average salaries for full-time employees are already more than 14% higher than in the UK.
“An individual earning a £30,000 salary will take home £27,450 in their first year of living in the Island £3,650 more than their UK counterparts. This represents a 15% increase compared with the UK as those earning the same salary would keep £23,800. Average salaries for full time employees are already more than 14% higher in the Isle of Man than the UK.” Laurence Skelly MHK, Minister for Enterprise, Isle of Man
Employees who wish to take advantage of the scheme will be charged National Insurance during their first 12 months of employment, after which they can then apply to the Income Tax Division for a refund of their contributions. To qualify, the employee must remain in employment for a continuous period of at least 12 months.
Why was it introduced
In his budget announcement made on February 19, 2019, The Isle of Man Treasury Minister, Alf Cannan MHK, said the National Insurance Holiday Scheme, (due to come into effect this year),” aims to attract new working residents to the Island. Whilst this is mighty good news for ambitious employees looking for better payment conditions, it’s also good for business owners and the talented senior staff they want to recruit.
A great USP for employers looking to relocate their business
Should they be able to start or move a business to the Isle of Man, offering potential employees the opportunity to earn as much as 14% more than they would in the UK, is a great selling proposition.
Furthermore, The Isle of Man’s location, only just over an hour’s flight to London airports, and Manchester under the hour, means relocating there isn’t a huge lifestyle change for UK based employees, (also the fact its English speaking and great for sailing), means it really is like an extension of elements of pleasant semi-rural life on the mainland.
Who is eligible
The scheme will be open to anyone who has not been tax resident on the Isle of Man for the last five tax years. They have also have to take up both residence and full time, permanent employment with a gross salary of at least £21,000 or more, on or after 6th April 2019. Eligible residents will apply for a refund on the National Insurance contributions for their first year of living or returning to the Isle of Man, with refunds capped at £4,000.
“The introduction of a National Insurance holiday is a clear message that the Isle of Man welcomes skilled workers and graduates to our shores. We will be looking at ways in which we can promote this initiative to skilled workers across the globe to further demonstrate the benefits of living and working in the Isle of Man.” Laurence Skelly
Incentives for skilled senior staff to relocate with their families
Treasury Minister, Alf Cannan also made it clear that the scheme was set up to encourage Isle of man students to return to the Island for work following completion of a full-time university degree, higher national diploma or postgraduate course.
This is also a great USP for employers when recruiting for especially senior talent. Why” Because for senior talent, it’s another great incentive to relocate themselves and even their families to the Isle of Man, as if they have children, they will benefit from this scheme in the future too. Even better,” returning students don’t need to have the minimum gross salary of 21k to qualify for the scheme.
“This scheme enhances the already compelling reasons to live and work in the Isle of Man. We have an excellent quality of life, opportunities for career progression and average salaries which are higher than the UK. We believe this will be a fantastic incentive for Manx nationals to return home, as well as attracting new workers to our shores.” Laurence Skelly
The Isle of Man, a stone’s throw from the UK, English speaking and ripe for higher paid employment incentives” Perhaps it’s indeed time for business owners and talented employees to “go west”, and to the middle of the Irish Sea no less.
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