Jersey’s Public Finances

Introduction

Jersey’s status as a British Crown Dependency means that it is financially independent. It needs to raise revenue through taxation, levies and charges sufficient to finance Government expenditure. This paper explains the policies that govern the public finances, provides statistics on government income and expenditure, and summarises international comparisons and the views of the Fiscal Policy Panel.

Summary

A principle underlying the management of the Island’s public finances is that public services should be funded through balanced budgets.

Jersey has a tax system that is simple and stable. The personal income tax rate is 20% and tax thresholds are high. Companies are taxed at rates between 0% and 20%. Impôts are equivalent of excise duties in the UK.  Jersey has a 5% Goods and Services Tax (GST) rather than VAT.

The 2026 Budget is for government revenue of £1,307 million. The major components are income tax paid by individuals £753 million (56%), income tax paid by companies £234 million (17%) and GST £132 million (10%).

The 2026 Budget provides for government net revenue expenditure of £1,278 million.  The departments with the largest budgets are Health and Community Services £381 million (31%), Education and Lifelong Learning £188 million (15%) and Employment, Social Security and Housing £113 million (9%).

Capital expenditure in 2026 is budgeted to be £308 million, the major component of which is new healthcare facilities of £175 million.

The social security system is funded by contributions above a threshold from workers of 6% and employers of 6.5% (2.5% above monthly earnings of £6,062). The single person pension in 2026 is £298 a week. Pensions are funded – the fund to meet future pension liabilities is budgeted to be £2,619 million at end-2026. There are separate funds for long term care, which meet costs more than £77,220 a year, and health insurance.

Jersey has a Strategic Reserve Fund budgeted to be £1,575 million at end 2026.

In 2022 total government expenditure was 25.5% of GVA in Jersey, less than half the UK figure of 53.9%. Jersey’s GVA per capita was 60% higher than the UK’s.  Expenditure per capita was £13,800 in Jersey, 16% less than  the UK figure of £16,400. 

Compared with other jurisdictions, Jersey raises a high proportion of its tax revenue from tax on incomes and profits and a low proportion from taxes on goods and services.

In Its most recent annual report, the Fiscal Policy Panel noted that the draft 2026 Budget “proposes both an increase in day-to-day spending that exceeds revenue growth and a larger capital investment programme. Total proposed spend exceeds income and relies on borrowing and reducing reserves. Increasing spend at a time when Jersey’s economy is operating at capacity is likely to exacerbate domestically generated inflation. It is prudent for governments to save more during periods of strong income so that spending can still be covered during downturns.”

Financial principles

The following financial principles are used as a framework for decision-making in preparing the Island’s annual budget.

• The Budget must take into account the sustainability, stability and wellbeing of public finances.
• Public services should be funded through balanced budgets.
• Investment should be affordable and deliverable.
• Expenditure and assets should be used to deliver value for money.
• Fees and charges should be reasonable.
• Restrained approach to borrowing should be adopted.
• The value of the balance sheet should be preserved.

Tax system

Jersey has a simple and stable tax system.  There are few changes over time in the structure or rates of taxation, unlike the position in many other jurisdictions.  

Jersey’s tax policy is developed in accordance with the tax policy principles that have been agreed by the States Assembly –

1. Taxation must be necessary, justifiable and sustainable.
2. Taxes should be low, broad, simple and fair.
3. Everyone should make an appropriate contribution to the cost of providing services, while those on lowest incomes are protected.
4. Taxes must be internationally competitive.
5. Taxation should support economic, environmental and social policy.
6. Taxes should be easily implementable and administrable at a reasonable cost.
7. No one individual type of taxation will meet all these principles.  But overall, the tax regime should represent a sustainable balance. 

Taxes, and the mix of taxes, are reviewed and considered in light of these principles. The principles are similar to those in other jurisdictions, although there is scope for different interpretations. A distinguishing point for small jurisdictions with significant international business is that tax rates are to some extent a “price” for living or operating in the jurisdiction. It follows that it cannot automatically be assumed that any increase in tax rates will increase revenue; it is possible that the effect will be to reduce activity and therefore total tax revenue. Analysing the wider effects of possible tax changes is therefore critical in determining policy. 

Personal income tax is capped at the rate of 20%. In 2026, the threshold for paying tax is £21,250. There is an allowance of £3,850 for each child.

Once income exceeds the tax allowance, a marginal rate tax band of 26% is applied to taxable income until tax due is equal to an effective tax rate of 20%. From that point tax is paid at 20%.

By comparison, in the UK the single person threshold is £12,570 (2025/26), the basic rate of tax is also 20%, but higher rates of 40% are levied on income over £50,270 and 45% on incomes over £150,000. In Guernsey, the single person threshold in 2026 is £15,200. The high thresholds mean that a significant proportion of workers in Jersey pay no income tax and about 50% of personal income tax revenue is paid by just 12% of taxpayers. There are special provisions for high value immigrants. Jersey has no capital gains or inheritance taxes.

In addition to large corporate retailers (annual turnover in Jersey in excess of £2 million), a number of specialist businesses including property development, residential and commercial letting and utilities are taxed on their profits at the rate of 20%. Companies that are financial services businesses are taxed at 10% and all other companies are taxed at 0%. This is known as the 0/10 model of company taxation. These low rates help to bring business to the Island and increase the yield of personal income tax from those working for the businesses. As with personal income tax, company income tax is designed to attract business to the Island and therefore takes account of tax rates in other jurisdictions. 

Impôts are similar in effect to excise duties in the UK. They are levied on imports of fuel, vehicles, alcohol and tobacco.

There is no Value Added Tax in Jersey. Rather there is a Goods and Services Tax (GST). This is levied at the rate of 5% on all goods and services with the exception of accommodation, exports, financial services, medical services, charities and school fees (provided the school is a registered charity).   There is a £300,000 threshold for GST, so small retailers are exempt. Goods bought from outside the Island with a value of £60 or more are subject to GST. 

Government finances

Like other nations Jersey has to raise taxes to finance public expenditure.    The detailed statistics for 2024 are published in the States of Jersey 2025 Report and Accounts.  Estimates for 2026 are in the Budget (Government Plan) 2026 – 2029.The statistics in this paper are largely extracted from that report. 

Table 1 shows how revenue is estimated to be raised in 2026.

Table 1  Jersey Government budgeted revenue, 2026

Table 2 shows the planned departmental expenditure figures for 2026 as set out in the Budget (Government Plan) 2026 – 2029. The figures are all net, that is after deducting income received by the department.

Table 2  Planned revenue expenditure by department, 2026

Capital expenditure in 2025 is forecast to be £308 million, made up of –

  Estates                                                                                                         £61 million

  Infrastructure                                                                                            £34 million

  Information technology                                                                         £25 million

  Healthcare facilities                                                                                 £175 million

  Other capital expenditure                                                                     £13 million

  Total                                                                                                            £308 million

Expenditure of new healthcare facilities is budgeted to be £666 million between 2025 and 2028.

Reserves

The Government’s policy is to fund revenue expenditure from income rather than borrowing and to hold reserves in a number of funds. However, the nature of Covid meant that a significant budget deficit occurred in 2020 and 2021.

The Strategic Reserve Fund was established in 2005 to be used in exceptional circumstances to insulate the Island’s economy from severe structural decline or from major natural disasters. The forecast figure for the fund in 2026 is £1,575 million.

The Stabilisation Fund was established in 2019 and is forecast to be £0.6m in 2026. The intention was to build up the fund in buoyant economic conditions and make payments from it at times of economic downturn.  £50 million was paid into the fund in 2019, almost all of which was spent in 2020 in response to the pandemic.

Social security

Jersey has its own social security system, providing the full range of benefits. The basic pension for a single person is £298 a week and for a married couple, based on the husband’s earnings, it is £496. Employees pay a social security contribution rate of 6% on monthly earnings between £1,296 and £6,062. Employers pay 6.5% of employees’ monthly earnings up to £6.062 and 2.5% on earnings between £6,062 and £27,632. By comparison, in the UK employees pay 12% and employers 13.8%, to be increased to 15% in April 2025.   

In 2026, Social Security contributions are estimated to be £285 million and benefits £353 million. The Social Security Fund is estimated to have a balance of £109 million at the end of 2026. Unlike the UK, Jersey State pensions are funded rather than met by current contributions. The reserve fund to meet future pension liabilities is estimated to be £2,619 million at the end of 2026.

In addition there is an income support scheme funded by general taxation.

The funding of long-term care is a challenge for all countries. Jersey operates a long-term care scheme under which care costs in excess of £77,220 a year are met by a fund if certain conditions are met. The scheme is paid for by an additional charge of 1.5% on taxable income and a government grant – £40 million in 2026.  In 2026, contributions are estimated to be £52 million and benefits to be £96 million. The fund is estimated to be £41 million at the end of 2026.

There is a separate Health Insurance Fund. In 2026, contributions, which are part of social security contributions, are estimated to be £54 million and benefits £59 million. The fund is estimated to be £93 million at the end of 2026.

International comparisons 

On 13 March 2024, Statistics Jersey published Government employment, revenue and expenditure – international comparisons. The foreword to the report states that –

This report pulls together already published information from Statistics Jersey, Government of Jersey departments, and international organisations such as the Organisation for Economic Co-operation and Development (OECD) and the European Union (EU), to paint a picture of the Government of Jersey compared to our neighbours and international comparators.

This section draws exclusively on that report.

Tax revenue as a percentage of Jersey’s Gross Domestic Product (GDP) in 2021 was 22.9%, substantially lower than the OECD average (34.2%) and the United Kingdom (33.5%).

The section on the structure of the tax system in 2021 is reproduced below –

“Jersey received 55% of its tax revenue from tax on income, profits, and capital gains, compared with the OECD average of 35%. Among the jurisdictions compared, Jersey had the fourth-largest proportion of tax from this source, with only Denmark (66%), Australia (62%), and New Zealand (57%) receiving a higher proportion of their taxes from income, profits, and capital gains. Note that Denmark, Australia, and New Zealand all fund their social security systems through general taxation rather than social security contributions. Of all the jurisdictions compared, Jersey had the largest proportion of revenue from these income tax and social security contributions, at 76%; in comparison, the OECD average was 61%.

Jersey had the lowest proportion of tax received from goods and services at 16%, half the OECD average of 32%, and marginally lower than that of the United States at 17%.”

A more detailed analysis of tax revenues relating to wages and salaries by type was provided –

“Taxes on wages and salaries include: taxes on personal income, profits, and capital gains (i.e. excluding taxes on corporate incomes, profits, and capital gains); social security contributions; and taxes on payroll and workforce. Of all the jurisdictions compared, Jersey had the highest proportion of tax revenue collected from taxes on wages and salaries at 69%, compared with an OECD average of 52%.

Jersey had the second-largest proportion of tax revenue from taxes on personal income, profits, and capital gains at 48%, double the OECD average of 24%. Only Denmark had a higher proportion of tax revenue from personal taxes, at 52%. However as noted above, Denmark, Australia, and New Zealand fund their social security system through general taxation rather than separate social security contributions.

The proportion of tax revenue in Jersey collected through social security contributions was 21%, which was below the OECD average of 26%, and was between Sweden (21%) and the UK (20%).

Government expenditure as proportion of GDP in 2021 was 28.1%, just over half the EU proportion of 50.2% and the UK proportion of 48.2%.  Jersey’s proportion was similar to that of Guernsey (29.0%), Ireland (24.8%) and the Isle of man (24.0%). The report noted that “all these jurisdictions have large finance and professional services sectors that generate a high GDP per capita.” Government expenditure per capita in purchasing power parity terms was $16,937, well below the OECD average of $24,432 and the UK figure of $24,420.”

The following table, reproduced from the report, shows a breakdown of expenditure.

Table 3 Breakdown of Government expenditure by function, 2021

The report identified the following key points –

• Jersey’s spend on general public services (9.4% of spend) was marginally above that of Ireland (9.3%), and slightly below that of France (9.8%) and the UK (9.7%), all of which were below the EU average (11.7%).
• Social protection was the largest proportion of spend in all five jurisdictions: 32.7% in Jersey, 33.3% in the UK, 35.2% in Ireland, 41.9% in France and 39.9% for the EU.
• Defence represented only 0.1% of government expenditure in Jersey, compared with 4.5% in the UK, 0.8% in Ireland, 3.0% in France, and 2.5% in the EU.
• Jersey’s spend attributed to housing and community amenities was 0.5%, lower than the proportions in the other jurisdictions considered: 1.7% in the UK, 2.3% in Ireland, 2.1% in France, and 1.2% in the EU.  The report notes that Andium Homes is included in social protection, and not housing
• Jersey had the highest proportional spend of these five jurisdictions on health, which represented 28.5% of government expenditure in Jersey, 20.5% in the UK, 21.2% in Ireland, 15.6% in France, and 15.8% in the EU.
• Jersey had the second-highest proportional spend of these five jurisdictions on education, which represented 11.6% of government expenditure in Jersey, 11.2% in the UK, 12.0% in Ireland, 8.9% in France, and 9.4% in the EU.

On 27 September 2024, Statistics Jersey published  Public Spending Statistics 2023 which provided further analysis of public expenditure and international comparisons.

The summary of the report is reproduced below –

In 2023:

• general government expenditure increased in real terms by 6.3%, or £97.9 million in constant year 2023 prices, to £1,644.2 million 
• the biggest drivers of increased real-term expenditure were:
  • health – increased by £51.6 million, driven by increased spending on hospital and outpatient services
  • public order and safety – increased by £14.9 million, largely as a result of a number of major incidents that impacted the Island in 2023
  • social protection – increased by £14.5 million 
• almost three-quarters (73%) of all general government expenditure was in the areas of social protection, health and education

In 2022:

• as a proportion of GDP Jersey’s total general government expenditure was lower than all OECD countries, apart from Ireland
• Jersey spent more on health than all OECD countries as a proportion of total spend, but less than several countries, including the UK, as a percentage of GDP

The following table, reproduced from the report shows expenditure by category in 2022 and 2023 in 2023 prices, using the international Classification of the Functions of Government (COFOG) system.

Table 4 Breakdown of Government expenditure by function, 2023 prices

The report commented that almost three-quarters (73%) of all general government expenditure is in three main areas of expenditure:

• Social protection – which includes the Jersey old age pension, income support and incapacity allowances.
• Health – which includes spend on hospital services, public health and other medical services.
• Education – which includes spend on primary, secondary and tertiary education.

On international comparisons the report shows –

• Total government expenditure as a proportion of GDP (25%) is lower than all OECD countries except Ireland. The UK proportion is 44%.
• Jersey spends a greater proportion of public expenditure on social protection, health and education than most OECD countries, driven by a high proportion of spending on health.
• 0.1% of general government expenditure is on defence, lower than any of the comparator nations.
• A lower proportion or expenditure is on general economic affairs – generally subsidies – than any OECD nation.
• The proportion of expenditure on health is higher than in any OECD nation.
• The proportion of expenditure on hospital services is higher than in any OECD nation.
• Total government expenditure as a proportion of GDP (25%) is lower than in all OECD countries except Ireland.

Fiscal Policy Panel analysis and forecast

Jersey’s Fiscal Policy Panel, a group of economists, provides the Government with independent advice on trends in the economy and the sustainability of the public finances   

The Panel published its 2025 Annual Report on 3 November 2025.  Its summary on public finances is set out below –

• Public expenditure continues to rise driven by increased day-to-day spending rather than investment in productive capacity. Compared to the previous budget, Budget 2026 increases day-today spending by £207 million (5%), facilitated by the proposed cut in the States Grant to the Social Security Fund, while revenue increases by £30million (1%). In 2026 alone, departments receive an extra £53 million for growth allocations (real increases in departmental budgets to fund additional policies). Growth allocations are not for one-off spend and will need funding on a recurring annual basis.
• The ‘operating balance’ (the difference between revenues and day-to-day spending) is forecast to move into a £12 million deficit in 2026. Increases in day-to-day spending continue to outstrip increases in revenue, with a reduction in the States Grant used to fill the funding deficit in departmental budgets and with further borrowing required to finance capital projects. This is despite the additional tax revenues forecast from Pillar Two. Whilst the operating balance is forecast to return to surplus in 2027 this is mainly because of the reduction in the States grant to the Social Security Fund (£42million in 2027). The ‘overall balance’, total income less day-to-day and capital spending, remains negative each year as capital spending and borrowing costs rise. The faster growth in spending compared to income continues a general trend, which started during the COVID pandemic and continuing thereafter. Since 2019, income has grown by 49% while day-to-day spending has grown by 58%, producing cumulative overall deficits of £345 million (when combined with capital) that have been financed by reserve drawdowns and borrowing.
• As with the previous budget spending on health accounts for most of the increase in day-to-day spending. 58% (£121million) of the increase in day-to-day spending is additional expenditure on health. Including the increase in health spending from Budget 2025, proposed health spending in 2026 is a third higher (£95 million) compared to the level proposed for 2026 in Government Plan 2024. Health has overspent its budget allocation in each of the last two years. On current plans, by 2029 the Long-Term Care Fund will be exhausted and the Health Insurance Fund will have less than a year’s expenditure creating further pressures. The planned review of healthcare spending requirements and the proposal to move to 3-year budget planning are welcomed but financial discipline is essential if spending growth is to be managed and overspending avoided.
• Capital spending is increasing, financed in part by new borrowing. The Budget proposes an average capital spend of £256 million a year through 2026-2029, including on the New Healthcare Facilities (NHF). Capital spend will, in part, by financed by new borrowing of £43 million – in addition to the £523m of borrowing for NHF. Annual capital spending will equate to around 3.5% of GDP, equal to the average for OECD countries.
• Total public debt is forecast to peak at £1.3 billion in 2026, around 17% of GDP, with debt-interest costs approaching £48 million by 2028. This is more than the total funding for some departments. Higher debt servicing costs will absorb a larger share of revenue and increase the sensitivity of the Budget to future movements in interest rates.
• The Strategic Reserve and Stabilisation Fund remain below the value the Panel regards as prudent for Jersey. Previous work by the panel examined small and open economies, like Jersey, that were dependent on international capital flows, and recommended a Strategic Reserve between 30% to 60% of GDP (see Fiscal Policy Panel Advice for 2020-23 Government Plan). The Strategic Reserve is currently below 20% of GDP and will fall to 18% as £277 million is used to fund New Healthcare Facilities. The Stabilisation Fund is exhausted. Budget 2026 proposes drawdowns from the Social Security Reserve Fund to help address current year overspends.

In summary, Budget 2026 proposes both an increase in day-to-day spending that exceeds revenue growth and a larger capital investment programme. Total proposed spend exceeds income and relies on borrowing and reducing reserves. Increasing spend at a time when Jersey’s economy is operating at capacity is likely to exacerbate domestically generated inflation. It is prudent for governments to save more during periods of strong income so that spending can still be covered during downturns.

Following is the summary of the Panel’s recommendations –

• Budget 2026 continues the trend of increasing day-to-day spending seen in previous years.
• Day-to-day spending is approaching total income for the period, leaving no headroom for capital spending, and overspends have been frequent in recent years.
• The trajectory of day-to-day spending is unsustainable given Jersey’s revenues, and will need to be curtailed in future Budgets. High levels of public spending, especially on services, in a capacity constrained economy is likely to add to existing inflationary pressures.
• The Strategic Reserve and Stabilisation Fund need rebuilding. These reserves were specifically created to protect Jersey from economic shocks that can be detrimental to a small island economy. The Strategic Reserve is underfunded, and the Stabilisation Fund is empty. The commitment made in Budget 2025 to use relatively certain Pillar Two revenues to replenish the Stabilisation Fund has been abandoned. Without adequately funded reserves the risks to Jersey and its economy are greater.
• Drawdowns from the Social Security Reserve Fund should only be made based on a comprehensive actuarial assessment of future pension liabilities. The decision in Budget 2026 to withdraw funds and cut the contribution to the Fund before the results of the 2025 actuarial review are published is not prudent.
• The States of Jersey needs to save more. Compared to pre-COVID-19 pandemic, Jersey’s balance sheet has deteriorated significantly (as a percentage of GDP). A weaker balance sheet makes Jersey susceptible to fiscal and economic shocks that would damage public services and employment.
• Pillar Two income should be used prudently. Saving should be prioritised over additional spend, particularly day-to-day spending. The Panel recommends that Pillar Two income should be invested in replenishing the Stabilisation Fund and in building the Strategic Reserve to the minimum value advised by the Panel. Some of the income could be used to fund investment in capital, or productivity-enhancing measures, but should not be used to fund day-to-day spend.

Further information

The most accurate statistics on the Island’s finances are in the States of Jersey 2025 Report and Accounts. However, this is a long, technical and complex document. There is a better analysis of the figures and forward projections in the Budget (Government Plan) 2026 – 2029.