A new tax system for residents of Sark could see amendments to the island’s Personal Capital Tax system rather than a complete overhaul.
The Policy & Finance Committee and a special Tax Committee have been looking at the issue and have now started public consultation in the island, with one surgery taking place last weekend and two more to follow.
The two committees have said that their thinking is based on the need to maintain a system that the island can administer largely by itself.
Sark expects to spend £2.5m. in 2026 – up by £306,000 or 13.98% – and aims to make a £30,000 surplus over the year.
Chief Pleas is looking to take a further £318,667 off islanders over the course of the year. The Budget sees 55% of Chief Pleas’ income coming from direct taxation on islanders. 14% of its income will come from import duties and 7% from rubbish charges, and 6% from property transfer taxes.
Minimum personal tax has been set at £630 and maximum has risen to £12,619.
Current taxes
Sark’s direct taxation is governed by the Direct Taxes (Sark) Law, 2002. There are two principal forms of tax – Property Tax and Personal Capital Tax.
Property Tax
Based on the size and type of property, measured in quarters, as recorded by the Cadastre.
Rates vary depending on use (domestic, commercial, agricultural).
Paid annually, generally by the ‘possessor’ of the property.
Personal Capital Tax
Payable by all residents who spend 90 or more nights on Sark in the preceding year. Residents may currently elect from several options:
Minimum Tax – available to non-possessors or those whose worldwide assets fall below the minimum asset rate.
Asset declaration – tax based on a percentage of worldwide net assets, not including a personal residence in Sark.
Maximum Tax – a capped annual contribution which also means the taxpayer does not need to declare their assets.
Exemptions – for those medically unable to work or whose worldwide assets fall below the minimum asset rate.
At present, there are several options to reduce tax liability or to avoid declaring assets. These include:
Forfait – available to possessors of a personal residence. This is a multiple of their property tax and also means they do not have to declare their assets.
Box 2 – electing to pay the minimum tax in a household where the possessor has elected to pay the Forfait.
Box 6 – with net assets falling below the minimum asset rate, aged under 69 and the possessor of a property that is the principal dwelling house, thereby exempt.
Box 7 – as a possessor living outside of Sark where their property was not available to them for 90 nights or more during the preceding 12 months, thereby exempt.
Chief Pleas said that this system allows residents to choose the option which minimises their liability, regardless of ability to pay. A resident with £25m. in assets could currently pay the same Forfait amount as a resident with £250,000. Under the proposed system, a higher level of assets would attract a higher contribution in line with the ability to pay.
Proposed changes
Sark currently allows residents to choose the lowest-cost Personal Capital Tax option available to them, meaning their personal assets are not necessarily fully taxed.
But the island faces growing infrastructure and service costs that cannot be met under the existing system, and so a proposal is being explored to transition away from Forfait to an entirely asset-based system of Personal Capital Tax.
‘This would not be an income tax,’ the committees said. ‘It would be an annual charge based on an assessment of worldwide net assets that is already an option under the current system.
‘There would be an option where people could select not to declare their assets and opt to pay a fixed amount of PCT. The aim is a system that is fairer, sustainable and fit for Sark’s future.’
Under the proposed new model, all residents aged 18-plus who meet the 90-night residency rule would pay PCT according to the asset band into which they fall, which could be based on fixed sums per asset band or a banded percentage of their overall asset declaration.
Why change?
The committees said that in their most recent public consultation, there was strong support to modernise the current system, on grounds of fairness, sustainability and modernisation.
Fairness: The current system allows residents with a high level of assets to potentially pay the same as those with a modest number of assets – removing the Forfait might better align the level of contributions with ability to pay.
Sustainability: In 2025, the 154 Forfait payers and the 93 members of their households contributed £475,409 to the Treasury while 34 residents who declared assets raised just £40,659. ‘This suggests that, for whatever reason, be it to select a lower tax amount or not wishing to declare assets, a very large percentage of taxpayers are opting for a PCT option which is not linked to their worldwide assets,’ the committees said. ‘This base cannot support Sark’s growing infrastructure needs.’
Modernisation: A banded asset-based model does not divert too much away from the current system while preserving Sark’s distinctive tax identity.
Why Sark needs a stronger tax base
The committees said: ‘Sark is entering a period of major capital investment. Much of the island’s infrastructure was built decades ago and now requires urgent renewal to remain safe, functional and compliant with modern standards. Preliminary estimates indicate that the capital and service pressures will exceed current tax revenues by several hundreds of thousands of pounds each year, Without reform, Sark will struggle to meet these obligations safely and sustainably.’