The States of Guernsey Annual Budget for 2026

The States are asked to decide whether, after consideration of the Policy Letter entitled “States of Guernsey Budget, 2026”, they are of the opinion:

1. To agree the amount of tax relief in respect of mortgage interest paid on a principal private residence as £2,500 for 2026, £1,500 in 2027, £750 in 2028 and zero for 2029 and future years.
2. To endorse the intention of the Policy & Resources Committee to increase the Standard Charge specified in Section 5B(2) of the Income Tax (Guernsey) Law, 1975, as amended, from £40,000 to £50,000 in respect of the Year of Charge 2026 and subsequent years, by regulation under that subsection.
3. To agree that the annual tax-free lump sum limit for a pension scheme remains at £203,000 for 2026 and future years.
4. To amend the definition of a distribution in Section 62AA of the Income Tax (Guernsey) Law, 1975, as amended, so that it would also catch any transfer of the assets of the company for the repayment of, or otherwise, in respect of, an advance of money to the company by a member of the company or by a person connected with a member (whether or not the advance is secured), with an exclusion in respect of the repayment of commercial loans to trading companies.
5. To endorse the intention of the Policy & Resources Committee to continue previous workstreams to better understand the scale of accumulated untaxed, undistributed profits in Guernsey resident companies, to include consideration of incentivising earlier taxable distributions and any other mechanisms to increase revenues from this source of profits.
6. To agree the taxation point of a benefit in kind in relation to share award and share option schemes made from 1 January 2026 changes to the date of vesting/exercise, rather than date of grant, (with the benefit value to remain the amount calculated at point of grant) with a maximum period of seven years to be introduced (if the vesting/exercise period is longer than seven years the tax event occurs at the seven year point). To introduce exceptions into legislation to tax the benefit on death, retirement, leaving the employer or leaving the island, where the award/options are not forfeited on the occurrence of that event.
7. To agree that an excess repairs allowance may be given to a landlord, from 2026, for the cost of repairing, maintaining, insuring and managing a let property based on the expenses incurred in the actual calendar year, rather than it being based on the expenditure incurred in the previous five years (this allowance not to create a loss), with any transitional provisions as deemed necessary when the legislation is drafted.
8. To approve the draft Ordinance entitled “The Excise Duties (Budget) Ordinance, 2025” and to direct that the same shall have effect as an Ordinance of the States.
9. To endorse a review of the duty-free allowances for tobacco products, with proposals to be made in the 2027 Budget Report.
10. To agree that a duty rate of £2.20 per 10ml of vaping liquid is introduced during 2026.
11. To approve the draft Ordinance entitled “The Taxation of Real Property (Guernsey and Alderney) (Amendment) Ordinance, 2025” and to direct that the same shall have effect as an Ordinance of the States.
12. To approve the draft Ordinance entitled “The Document Duty (Rates) (Amendment) Ordinance, 2025” and to direct that the same shall have effect as an Ordinance of the States.
13. To approve the draft Ordinance entitled “The Document Duty (Anti-Avoidance) (Rates) (Amendment) Ordinance, 2025” and to direct that the same shall have effect as an Ordinance of the States.
14. To approve the draft Ordinance entitled “The Motor Taxation (First Registration Duty) (Guernsey) Ordinance, 2025” and to direct that the same shall have effect as an Ordinance of the States.
15. To direct the Committee for the Environment & Infrastructure in consultation with the Policy & Resources Committee to implement an additional First Registration Duty charge for private high value vehicles during 2026.
16. To agree that the project for site clearance at Leale’s Yard is added as a delivery project in the current Major Projects Portfolio.
17. To reduce the Routine Capital allocation for Information Technology for 2025-2028 by £2.5m to £15.5m.
18. To approve provision within the 2026 Budget for a transfer from the General Reserve to Guernsey Ports to fund its 2026 cash requirements estimated at £2.2m.
19. To approve provision within the 2026 Budget for a transfer from the General Reserve to Guernsey Dairy to fund its 2026 cash requirements estimated at £1.4m.
20. To approve Committee Net Expenditure for 2026 totalling £678m as set out in the table in paragraph 6.21 and the Committee Net Expenditure budgets as set out in Appendix V.
21. To approve the following Budgets for the year 2026:

• Guernsey Ports
• Guernsey Water
• Guernsey Waste
• States Works
• Guernsey Dairy
• Superannuation Fund Administration
• Committee for Employment & Social Security – Contributory Funds.

22. That, subject to the provisions of the Income Tax (Guernsey) Law, 1975 and to the provisions of this Proposition, the allowances claimable for the Year of Charge 2026 by an individual solely or principally resident in Guernsey by way of relief from income tax at the individual standard rate, shall be the allowances specified in the First Schedule to this proposition;

• the allowances specified in the First Schedule to this proposition shall only be granted to an individual who has made a claim in accordance with the provisions of the Income Tax (Guernsey) Law, 1975 and who has proved the conditions applicable to such allowances and prescribed in the Second Schedule to this proposition have been fulfilled;
• “Family Allowances” means Family Allowances payable under the Family Allowances (Guernsey) Law, 1950 as amended; and
• “the Income Tax (Guernsey) Law, 1975” means that Law as amended, extended or applied by or under any other enactment and includes, where relevant, any Ordinance, regulation or Resolution of the States made under that Law.

23. To direct the preparation of such legislation as may be necessary to give effect to the above decisions.