Workers are moving to the Isle of Man to receive a £4,000 discount on their tax bill for relocating, as experts call for similar schemes to be implemented across the country to stimulate the economy after Brexit.
The self-governing crown dependency is offering new residents who relocate to the island a “holiday” from National Insurance contributions, allowing them to claim back the payments they have made with a limit of up to £4,000 a year.
It comes amid Government plans to slash taxes to boost trade and business as the country departs the EU.
Under the scheme, an individual earning an annual salary of £30,000 would take home £27,450 in their first year of living in the Isle of Man, which is 15pc more than the £23,800 their mainland counterparts would keep.
The scheme is open to anyone who has not been a tax resident on the Isle of Man for the last five tax years and who takes up residence and full-time permanent employment with a gross salary of £21,000 or more, although this earnings threshold does not apply to returning students.
Jodie Brannon, 34, moved to the island from Manchester, where she worked as a nurse, in June. She said the tax incentive was the main factor in her relocating. She also received financial help with her moving costs, as part of a relocation package for people working in healthcare.
Twentysomething Lauren Fletcher was born on the island but left to study at university in Newcastle and then work in London. She moved back to the island to escape her 90-minute daily commute from Brighton to the capital, which cost her £5,000 a year.
She said that she would put the money saved by the tax break towards a deposit on a house.
Peter Beaumont, a 22-year-old design engineer who also relocated to take advantage of the scheme, said he planned to put the extra cash towards funding his hobby for motorcycles, for which the island is famous.
Alfred Cannan, the Isle’s treasury minister, said the scheme had helped to stimulate the local economy, attract new people to the area and helped more people find work.
Ahead of the Budget, which will be presented by new Chancellor Rishi Sunak on Wednesday, Alexander Hammond of the Institute of Economic Affairs, a think tank, said the Government should embrace similar policies and cut taxes to galvanise business growth.
This would live up to the Prime Mionister’s promise to open up Britain for trade around the world and provide jobs in neglected areas of the country, in line with the Conservative Party’s “levelling up” pledge, he said.
“So far the Government seems to be focusing on large infrastructure spending and less on cutting taxes, but incentives like these are proven to affect behaviour,” he added.
The Government is already consulting on creating 10 new “freeports”, which will be exempt from the normal rules on customs duties and other taxes. It says this will incentivise trade with other countries, provide regeneration in neglected regions and create jobs.
The Conservatives had previously promised to cut the 19pc rate of corporation tax to 17pc but shelved the policy in the run up to the December general election.