Taxes

Taxes

Personal tax allowance

The biggest change in this year's Budget is the proposed increase in personal income tax allowance.

In the highest increase in recent years, it's going up by £2,250 to £17,000 for individuals and by £4,500 for jointly assessed couples to £34,000.

This is triple the £750 increase proposed until the Budget revisions a few weeks ago when Treasury Minister Chris Thomas MHK took on the role.

Income tax

The higher rate of income tax is staying the same as last year.

In 2024 the then treasury minister, Alex Allinson, increased it from 20% to 22% while a new NHS levy was developed.

Last year, that rise was halved, taking the higher rate to 21%, although in September 2025 government announced it would no longer be progressing with the plans.

The extra income was still to be ringfenced for the health service though.

This year, Minister Thomas says the higher rate will be unchanged, staying at 21%, with that 1% still ringfenced for healthcare.

How Income Tax works:

Everyone has a chunk of their income which they don't get taxed on, which is changing this year.

That means individuals can earn £17,000 and jointly assessed couples can earn £34,000 before paying any tax.

Income Tax is split into two parts - the lower rate and the higher rate.

The lower rate means everyone will be taxed on 10% of the next £6,500 they earn.

After that, any remaining earnings will still be taxed at 21%.

You can work out what you'll be paying here:

Tax cap

The tax cap, which is the most tax an individual will pay, is staying at £220,000 a year.

National Insurance contributions

Employed: 

Earners also pay National Insurance (NI), which goes into the National Insurance Fund covering things like the state pension and certain other welfare payments. 

The rates will remain at the current levels of 11% for employees and 12.8% for employers. 

If the Budget’s approved by Tynwald, the lower earnings limit will increase from £125 to £129 per week from April 2026 to reflect the equivalent increase announced as part of the 2025 UK Budget. 

The Thresholds at which employees and employers will start to pay class 1 NIC will increase from £168 to £176 per week.

The upper earnings limit will increase from £1,032 a week to £1,082, with anything over this continuing to be charged at 1%. 

Self-employed: 

For the next tax year, the plan is to retain the rates of class 4 NIC at 8% up to the upper profits limit and 1% for profits above that. 

The lower profits level, at which class 4 NIC becomes payable, will increase from £168 per week to £176. 

The upper profits level will increase from £1,032 a week £1,082, with anything over this continuing to be charged at 1%.

Class 2 NIC will increase to £6.75 per week for self employed and £8.30 for share fishermen.

The level at which you will start paying is anything above £9,152.

The National Insurance Holiday Scheme will continue for returning Manx students.

Company Tax

The standard rate of tax applying to the income of companies remains at 0%, with the exception of income from:

• Banking business – 10%
• Retail Trade (subject to a small companies limit of £500,000) – 10%
• Land and property situated in the Isle of Man (development and rental income) – 20%
• Petroleum extraction in the Isle of Man and its territorial waters – 20%

You can hear what Treasury Minister, Chris Thomas MHK, said about taxes in Tynwald below: