PwC tax director Andrew Cardwell gives an assessment of the Manx Budget.

The Treasury Minister Alfred Cannan’s Budget speech provided a generally positive outlook on the island’s finances and economic future, whilst at the same time acknowledging external and internal pressures that are likely to impact the island in the short to medium term.

The mounting uncertainty of Brexit and certain international tax initiatives loom in the short term, and indeed domestically there are issues to resolve, in healthcare and public sector pensions for example, but overall it was quietly optimistic.

Domestic Issues

The main focus was on job creation and loosening the ’squeeze’ on taxpayers. For most, a third consecutive hike in the personal tax allowance, from £13,250 to £14,000, may be the highlight. Since 2016/17, the allowance has increased by 33%.

Elsewhere in the Budget, the points of note comprised:

a 12-month national insurance contributions holiday for new residents who arrive in the island on or after April 6, 2019 and take up employment within 12 months, and for returning students;

a new state pension from April 1, 2019, worth a little more than its equivalent in the UK, although the pension supplement will be frozen and gradually phased out;

despite setbacks, the Enterprise Development Scheme continues to offer loan and equity financing to both local businesses and overseas businesses wishing to relocate to the Island;

a new sugar tax from April 1, 2019, which is expected to generate income receipts of around £300,000 per annum; and

no extension to the scope of corporate tax charges on the banks, which was to include other, non-deposit-taking profits.

International Issues

External pressures will inevitably impact, albeit difficult to assess at this stage. Uncertainty over Brexit and new economic substance issues for Isle of Man companies are the two more immediate issues, although global economic uncertainty may ultimately be the overriding issue.

Unless a Brexit agreement is reached, the likelihood is of a temporary shock to the UK economy and the knock-on effect here in the Isle of Man.

Precisely what impact it will have is difficult to fully predict, but with uncertainty over international businesses’ view of a post-Brexit UK, there are obvious risks for the UK’s near neighbours.

Overall, it was a quietly positive Budget, with an emphasis on job creation and increasing disposable income, but with some caution in respect of the more uncontrollable, international matters that are on the horizon.