Budget sees largest ever personal allowance rise

The largest ever single increase in the personal tax allowance has been revealed as part of the Isle of Man's budget for the financial year ahead.

Delivering a budget billed as being of "stability, security and confidence", Treasury Minister Chris Thomas outlined the £2,250 rise – at a cost of £25m to the public purse – during a speech in Tynwald.

The move is set to take another 3,600 people out of the tax net completely and save median earners about £500 a year.

Promised by the chief minister in January's "economic reset" - which involved the appointment of Thomas to the position in a reshuffle – the rise will see the allowance bumped up to £17,000, doubling to £34,000 for couples.

Thomas said the increase was triple the £750 planned in the budget prior to his appointment – and would therefore cost an additional £10m on top of the £15m originally budgeted for.

The higher rate of income tax remains unchanged at 21%, payable on income above £23,500.

Workers will also benefit from a 4.8% uplift in National Insurance thresholds, leaving them with more take-home pay, with rates for employees and employers remaining unchanged.

Under the measures outlined, the Manx state pension is set to rise by 4.8% - in line with the triple-lock principle.

That will see the Basic State Pension increase to £184.90 a week, with the Manx State Pension going up to £263.55 a week.

However, most other benefits rise by either the UK's September inflation rate of 3.8% or the Manx rate of 2.9%.

But that spending will see £126m drawn down from reserves, as part of the new five-year strategy that will see that figure taper to £35.8m in the 2030-31 financial year.

Although the Manx government has about £1.95bn in its reserves, Thomas said the cash reserves stood at about £600m.

However, despite their continued use, the total is expected to rise to £2.22bn in 2030-31.

Thomas said the latest financial plan "sets a pathway towards reducing the island's reliance on general reserves despite a continuing need for significant public expenditure".

As part of those moves, he said the introduction of priority-based budgeting within government departments would create a more disciplined approach to spending.

A 2% restriction on pay awards would also help to create £5.6m in efficiency savings across the public sector.

The capital programme includes £250m in spending over five years, with £50m expected to be released each year.

However much of the spending would be on the "30 or so" projects already earmarked or in train as well maintaining the island's existing assets.

Among the planned spending is the replacement of emergency services vehicles and equipment.

The biggest rise in the funding allocations relates to a £45m uplift in the Department of Health and Social Care's budget for Manx Care, which takes healthcare spending to £412m.

Acknowledging the importance of healthcare, Thomas warned that "the sustained and substantial increase in costs in recent years remains a significant risk to the achievement of our medium-term financial plan".

Other increases include £2.8m on supporting transport connectivity including works to the airport tower and terminal, £4.4m on the childcare strategy, apprenticeships and vocational training, and £5.8m on island security.

Overall, the measures will see the government allocate £1.47bn in revenue spending, a rise of £83m on the previous year.

Thomas said while the additional revenue budget and capital funding "should provide stability and security" in line priorities in the Island Plan, it also offers a "solid boost of confidence".

"Confidence to secure jobs, confidence to increase private investment and confidence to export and grow the economy," he added.

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