Budget 2026: what it means for you and your business —

Guernsey & Cross-Border Tax

In short

Guernsey is a separate tax jurisdiction — it is not part of the UK tax system, and it does not levy VAT. It has its own company and personal income tax rules, and its interaction with UK tax is where most costly mistakes are made. LMJ Group has a Guernsey office and full UK capability, so we advise on both sides of the relationship rather than one.

Most UK accountants treat Guernsey as an afterthought, and most Guernsey advisers do not hold UK expertise. If you own or run a Guernsey company, live on the island with UK interests, or trade between the two, that gap is where the risk sits. Being a Crown Dependency, Guernsey is neither "UK" nor "foreign" in the way people assume.

Is Guernsey part of the UK for tax purposes?

No. Guernsey is a Crown Dependency with its own legislature, its own tax system and its own tax authority. It is not part of the United Kingdom for tax, and it is outside the UK VAT system — Guernsey does not charge VAT at all.

That has real consequences. Supplies between the UK and Guernsey are not domestic supplies. Residence, domicile and the source of income all need to be established carefully, and assumptions carried over from mainland practice are frequently wrong.

How is a Guernsey company taxed?

Guernsey operates its own corporate income tax regime, with rates that differ by the type of activity carried on. It also applies economic substance requirements — a company must demonstrate genuine activity and management on the island commensurate with the income it earns there. Substance failures carry penalties and information exchange with other jurisdictions.

If the company is managed and controlled from the UK, UK corporation tax may apply regardless of where it is incorporated. Getting residence right is the first question, not the last.

I live in Guernsey but have UK income — what do I pay?

It depends on the source of the income and your residence status in each jurisdiction. UK-source income — rental income from UK property, for example, or UK employment — will generally remain within the UK tax net, while Guernsey may also tax you as a resident.

The UK and Guernsey have arrangements to relieve double taxation, but they must be claimed correctly, and the outcome depends on the type of income. This is precisely the analysis we do.

What about VAT between the UK and Guernsey?

Guernsey does not levy VAT. For a UK business, supplies to Guernsey customers are not UK domestic supplies, and the treatment of goods differs from that of services. Import VAT and customs procedures can apply to goods moving between the jurisdictions.

Businesses regularly get this wrong in both directions — charging VAT that should not be charged, or failing to account for it where it is due.

On this page

Why LMJ Group

A genuine Guernsey office — not a UK firm with a Channel Islands page.

Both sides of the relationship — full UK and Guernsey capability in one firm.

Residence, substance and source analysed properly, before problems arise.

Bespoke advice — not mainland-UK boilerplate applied to an island client.

Chartered (ICAEW), with heritage to 1947.

Related services

Frequently asked questions

Does Guernsey charge VAT?

No. Guernsey is outside the UK VAT system and does not levy VAT. This affects how supplies between the UK and Guernsey are treated, and businesses frequently get it wrong in both directions — charging VAT that isn't due, or failing to account for it where it is.

Is a Guernsey company automatically outside UK tax?

No. If a company is centrally managed and controlled from the UK, it may be UK tax resident regardless of where it is incorporated. Guernsey also imposes economic substance requirements, meaning a company must demonstrate genuine activity and management on the island. Incorporation alone determines very little.

I'm a Guernsey resident with a UK rental property — where do I pay tax?

UK-source income such as rent from UK property generally remains within the UK tax net, and there are specific rules for non-resident landlords. Guernsey may also tax you as a resident, with relief available for double taxation. The exact outcome depends on the income type and must be worked through properly.

Do you advise on both UK and Guernsey tax?

Yes — that is the point of our Guernsey office. Most advisers handle one side or the other, and the gap between them is where the costly mistakes happen. We look at the whole position: residence, source, substance, VAT and double taxation relief together.

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This page provides general information about the 2026/27 UK tax year and is not advice on your particular circumstances. Tax and regulatory rules change frequently. Please contact us before acting, or refraining from acting, on anything set out here. LMJ Group is a firm of Chartered Accountants regulated by the ICAEW. LMJ Group is not a registered auditor and does not provide audit services. Last reviewed: July 2026.