The Finance and Economics Committee are proposing that from 1 January anyone with a mortgage over £275,000, or with loans or overdrafts that do not apply to their principal private residence, will no longer qualify for relief.
he proposals will affect those with loans for cars, boats, aircraft, and second homes in Jersey or elsewhere.
he new measures were put forward in the 2002 budget and have been detailed on the Income Tax Department website for some time.
rno Chilvers and Gordon Bennie, directors of Premier Asset Management, in Conway Street, say they are concerned that the proposals are being brought in ‘by stealth’, too quickly and without enough consultation or opportunity for a response from Islanders.
r Chilvers said he was also concerned that middle income earners would be hit hardest, while the wealthy would be able to structure their tax in some other way.
This has been a particularly difficult time for householders, who are now further in debt than ever before, enticed by low interest rates and poor investment returns to turn to property as their preferred investment.
The majority in Jersey have a high level of borrowings relative to their earnings.
Jersey house prices are on average much higher than in the UK and correspondingly the average mortgage debt is greater,’ he said.
he Comptroller of Income Tax, Malcolm Campbell, said that he ‘refuted completely’ any suggestion that there had not been enough time for consultation.
He said that a paper had been issued last December, advertised in the JEP, and people invited to submit comments over the following three months.
‘We had quite a lot of people making submissions, most people saw it, and it is nonsense to say we have done this by stealth,’ said Mr Campbell.
ut the advisers say that the time between the publication of the budget and the proposed start date does not give people enough time to make adjustments to their financial commitments, especially when the majority are preoccupied over the Christmas period.
‘People may want to restructure marine mortgages or home improvement loans secured on their property, to reflect the changes.
As an example, when life assurance premium relief was abolished in the UK the Chancellor gave one year’s notice of his intentions,’ said Mr Chilvers.
he advisers also say that more clarity should be provided by the Income Tax Department on specific issues.
For example, according to the guidance notes tax relief will be granted on loans intended wholly for generating profit from letting property on a commercial basis.
‘This may mean that you can purchase unlimited investment property and receive unlimited tax relief as long as you are doing this on a commercial basis.
The ordinary resident with only one property is to suffer a further tax burden, while the wealthy investor will still receive relief.
Mr Bennie added: ‘Maybe the implications have not set in, but it will become law on 1 January.
If it was delayed for a year, or made retrospective after a year, people would have time to make adjustments.