Bookkeeping Glossary: Jersey Accounting & Tax Terms Explained

Q: What is the difference between bookkeeping and accounting?

Bookkeeping is the day-to-day recording of financial transactions — sales, purchases, receipts and payments. Accounting is the interpretation and reporting built on top of those records, including annual accounts, tax returns and financial advice.

Q: Is GST the same as VAT in Jersey?

No. Jersey does not have VAT. It charges Goods and Services Tax (GST) at 5%, which is Jersey's own consumption tax and a quarter of the UK VAT rate of 20%. Registration becomes compulsory once taxable turnover exceeds £300,000 in a rolling 12-month period.

Q: What does ITIS mean in Jersey?

ITIS stands for the Income Tax Instalment System. It is how Jersey employees pay income tax through the year, deducted from each payslip at an effective rate set by Revenue Jersey. It is Jersey's equivalent of the UK's PAYE system.

Q: Does Jersey use UK National Insurance?

No. Jersey runs its own Social Security system, entirely separate from UK National Insurance. Employers and employees pay Class 1 contributions on earnings up to a monthly ceiling, and the self-employed pay Class 2 contributions.

Q: What is a bank reconciliation?

A bank reconciliation matches every transaction in your accounting records against your bank statement so the two agree. It catches missing entries, duplicates and errors, and is the foundation of books you can trust.

A

Accounts Payable: Money your business owes to suppliers for goods or services already received but not yet paid for. Shown as a liability on the balance sheet. Also called trade creditors.
Accounts Receivable: Money owed to your business by customers who have been invoiced but have not yet paid. Shown as an asset. Also called trade debtors.
Accruals: Costs your business has incurred but not yet been invoiced for, recorded in the period they relate to rather than when paid. Accruals accounting gives a truer picture of profit than cash accounting.
Aged Debtors Report: A breakdown of unpaid customer invoices by how long they have been outstanding — typically 30, 60 and 90+ days. The single most useful report for chasing cash.
Amortisation: Spreading the cost of an intangible asset, such as software or goodwill, over its useful life. The intangible equivalent of depreciation.
Annual Return Jersey: The yearly filing every Jersey company must make to the Companies Registry, confirming details such as shareholders and registered office. Due by the end of February each year, with a fee.
Assets: Everything the business owns that has value — cash, equipment, stock, and money owed to it. Split between current assets (convertible to cash within a year) and fixed assets.

B

Bad Debt: An invoice you have accepted will never be paid. Writing it off removes it from debtors and records the loss as an expense.
Balance Sheet: A snapshot of what the business owns and owes at a single date. Assets always equal liabilities plus equity — that balance is where the name comes from.
Bank Reconciliation: Matching every transaction in your accounting records against the bank statement so the two agree. Catches missing entries, duplicates and errors, and is the foundation of trustworthy books.
Bookkeeping: The day-to-day recording of financial transactions — sales, purchases, receipts and payments. Accounting is the interpretation and reporting built on top of it.

C

Capital Allowances Jersey: Tax relief for the cost of qualifying business equipment, claimed instead of the depreciation shown in your accounts. Jersey's rules differ from the UK's.
Cash Basis Accounting: Recording income and costs only when money actually moves. Simpler than accruals accounting, but it can badly misstate profit in a business that invoices on credit.
Cash Flow: The movement of money in and out of the business. A profitable business can still fail if cash arrives later than it leaves — which is why cash flow is tracked separately from profit.
Chart of Accounts: The structured list of every category your transactions can be coded to. A well-built chart is what makes management accounts meaningful rather than noise.
Combined Employer Return Jersey: The monthly return Jersey employers file covering both ITIS deductions and Social Security contributions in one submission to Revenue Jersey. The deadline most Jersey businesses trip over.
Companies Registry Jersey: The JFSC-operated register of all Jersey companies, where annual returns and company details are filed. Jersey's equivalent of Companies House.
Credit Note: A document that cancels or reduces a previously issued invoice — for a return, an overcharge or a discount. Never delete an invoice; issue a credit note so the audit trail survives.
Creditors: Anyone the business owes money to. See Accounts Payable.
Current Assets: Assets expected to turn into cash within twelve months — cash at bank, stock, and debtors.

D

Debit and Credit: The two sides of every double-entry transaction. Every debit has an equal and opposite credit, which is what keeps the books in balance.
Debtors: Customers who owe the business money. See Accounts Receivable.
Depreciation: Spreading the cost of a physical asset, such as a van or laptop, across the years it is used, rather than expensing it all at once.
Double-Entry Bookkeeping: The system where every transaction is recorded twice — once as a debit, once as a credit. Five hundred years old and still the basis of every accounting package.
Drawings: Money a sole trader or partner takes out of the business for personal use. Not a business expense and not wages — it reduces the owner's capital.

E

Effective Rate Jersey: The percentage Revenue Jersey tells an employer to deduct from an employee's pay under ITIS. Recalculated annually from the employee's tax position.
Equity: What would be left for the owners if every asset were sold and every debt settled. Also called capital or net worth.
Expenses: The costs of running the business. Only expenses incurred wholly and exclusively for the business are deductible against tax.

F

Financial Year: The twelve-month period your accounts cover. It does not have to match the calendar year, though many Jersey businesses align it with the tax year for simplicity.
Fixed Assets: Long-term items the business keeps and uses rather than sells — premises, vehicles, equipment. Depreciated over their useful life.

G

General Ledger: The master record containing every account and every transaction. Every other report is ultimately drawn from it.
Goodwill: The premium paid to buy a business above the value of its identifiable assets — reputation, customer relationships, trading name.
Gross Profit: Sales minus the direct cost of producing them, before overheads. The measure of whether the core trade itself works.
GST Jersey: Goods and Services Tax — Jersey's consumption tax, charged at 5%. Jersey's equivalent of VAT, at a quarter of the UK rate.
GST Registration Threshold Jersey: £300,000 of taxable turnover in a rolling twelve-month period. Cross it and registration is compulsory; below it, voluntary registration is still allowed.
GST Return Jersey: The periodic return registered businesses file to Revenue Jersey, declaring GST charged on sales less GST reclaimed on purchases.

I

Income Tax Jersey: Charged in Jersey at a standard rate of 20% with no higher bands. Many residents pay a lower effective rate through marginal relief.
Invoice: The formal request for payment issued to a customer. It creates the debtor entry — payment later clears it.
ITIS Jersey: Income Tax Instalment System — how Jersey employees pay income tax through the year, deducted from each payslip at an effective rate set by Revenue Jersey. Jersey's equivalent of PAYE.

J

JFSC Jersey: Jersey Financial Services Commission — the island's financial regulator, which also runs the Companies Registry.
Journal Entry: A manual adjustment posted directly to the ledger, used for corrections, accruals, prepayments and depreciation.

L

Liabilities: Everything the business owes — supplier balances, loans, tax due, and accrued costs. Split into current (due within a year) and long-term.

M

Management Accounts: Internal financial reports produced monthly or quarterly, showing profit, cash position and performance against budget. Unlike annual accounts, they exist to inform decisions while there is still time to act.
Marginal Relief Jersey: The alternative Jersey income tax calculation that applies personal allowances and taxes the balance at 26%. You pay whichever of that or the flat 20% produces the lower bill.

N

Net Profit: What remains after every cost, including overheads, has been deducted from revenue. The bottom line.
Nominal Code: The reference number that assigns a transaction to a category in the chart of accounts.

O

Overheads: The running costs that continue regardless of sales volume — rent, insurance, software, professional fees.

P

Payroll: Calculating and paying wages, along with the ITIS and Social Security deductions that accompany them, and filing the resulting returns.
Petty Cash: A small float of physical cash for minor purchases, reconciled against receipts like any other account.
Prepayments: Costs paid in advance for a future period — annual insurance, for example — spread across the months they cover rather than charged entirely to the month of payment.
Profit and Loss Account: The report showing income, costs and resulting profit across a period. Also called the P&L or income statement.
Purchase Order: A document sent to a supplier committing to buy at an agreed price, before the invoice arrives.

R

Reconciliation: Checking one set of records against an independent source until they agree. Applied to bank accounts, credit cards, supplier statements and stock.
Retained Earnings: Cumulative profits kept in the business rather than distributed to owners.
Revenue Jersey Jersey: The government department responsible for collecting Jersey income tax, GST and Social Security. Jersey's equivalent of HMRC.

S

Social Security Contributions Jersey: Jersey's own contributions system, entirely separate from UK National Insurance. Employers and employees pay Class 1 on earnings up to a monthly ceiling; the self-employed pay Class 2.
Sole Trader: A business owned and run by one individual with no separate legal identity. Profits are taxed through the owner's personal income tax return.
Statement of Account: A summary sent to a customer listing all invoices, credits and payments over a period, and the balance outstanding.
Suspense Account: A temporary holding account for transactions that cannot yet be correctly classified. A growing suspense balance is a warning sign, not a filing system.

T

Trial Balance: A list of every ledger account and its balance, used to confirm total debits equal total credits before accounts are produced.
Turnover: Total sales income before any costs are deducted. Not the same as profit — and the figure the GST threshold is measured against.

V

VAT Jersey: Value Added Tax, charged in the UK at 20%. Jersey does not have VAT — GST at 5% applies instead. Jersey businesses importing from the UK may still meet VAT on the supplier's side.

W

Working Capital: Current assets minus current liabilities — the money available to fund day-to-day trading. Negative working capital means short-term obligations exceed short-term resources.
Write-Off: Removing an asset or debt from the books once it has no remaining value or no prospect of recovery.

Z

Zero/Ten Jersey: Jersey's corporate tax regime: most trading companies pay 0%, financial services companies 10%, and utilities, large retailers and Jersey property income 20%.

Frequently Asked Questions

What is the difference between bookkeeping and accounting?

Bookkeeping is the day-to-day recording of transactions — sales, purchases, receipts and payments. Accounting is the interpretation built on top: annual accounts, tax returns and advice.

Is GST the same as VAT in Jersey?

No. Jersey has no VAT. It charges GST at 5%, a quarter of the UK's 20% VAT rate. Registration is compulsory once taxable turnover passes £300,000 in a rolling 12-month period.

What does ITIS mean in Jersey?

Income Tax Instalment System — how Jersey employees pay income tax through the year, deducted each payslip at an effective rate set by Revenue Jersey. Jersey's equivalent of PAYE.

Does Jersey use UK National Insurance?

No. Jersey runs its own Social Security system. Employers and employees pay Class 1 on earnings up to a monthly ceiling; the self-employed pay Class 2.

What is a bank reconciliation?

Matching every transaction in your records against the bank statement until the two agree. It catches missing entries, duplicates and errors, and is the foundation of books you can trust.

Important Disclaimer

These definitions are general information, not tax or accounting advice, and Jersey rates and thresholds change. Confirm your position with Revenue Jersey (gov.je) or a qualified adviser before acting.

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