BUDGET 2025: Income Tax rate to fall by 1%

Treasury claims move will reduce ‘financial burden’ on families

The higher rate of Income Tax on the Isle of Man will be reduced by one percent from April.

It will fall from 22 percent to 21 percent in a move which Treasury says will reduce the ‘financial burden’ on families and put money ‘back in people’s pockets’.

The lower rate of Income Tax remains at 10 percent. 

The personal Income Tax allowance will also rise by £250.

Individuals will only start paying tax on their annual earnings over £14,750 with jointly assessed couples starting from £29,500.

The number of families able to claim Child Benefit will increase as thresholds to qualify for support will rise by £10,000 to a maximum of £90,000; the benefit itself is going up by 2.2 percent. 

Most benefits will increase in line with inflation as of September 2024.

Reciprocal benefits with the UK will rise by 1.7 percent and others will jump by 2.2 percent.

Above inflation benefit rises will also be applied to the Nursing Care Contribution at 5.3 percent.

Maternity and Paternity and Adoption allowances will rise by 3.5 percent in a move expected to cost £100,000.

The Maternity Standard Allowance rate was £210.35 a week and will now rise to £217.71. 

The Maternity Payment is staying as a lump sum of £750. 

Maximum rates will rise from £241.50 a week to £249.95.

The Winter Bonus – which is given to help people with fuel payments – will increase by £50 to £400.

The basic state pension will increase by 4.1 percent to £176.45 a week; the Manx State Pension will rise by 4.1 percent to £251.30 a week.

Bereavement Support Payment, Disability Living Allowance, Employed Person’s Allowance, Attendance Allowance, Income Support and income-based Job Seeker’s Allowance will all increase by 2.2 percent.

Long-term and short-term Incapacity Benefit will also increase by 1.7 percent. 

The treasury minister says he wants to start implementing 'back to work' plans for those people who are in receipt of long-term benefits where appropriate.

Alex Allinson says an increasing number of people in receipt of these allowances are younger people with mental health issues – something he’s described as a 'real concern'.

The tax cap will be increased to £220,000 a year.

Treasury also says revenue collected by implementing new global tax rules will also lead to £10 million a year being allocated to supporting Island businesses from 2027.

You can find out more about Budget 2025 by clicking HERE.