Isle of Man in good financial shape The Isle of Man, where many British expats hold savings and investments, appears to be in better shape financially than mainland UK, according to figures revealed in the recent annual budget speech by its treasury minister Eddie Teare. Mr Teare revealed that the island's economy grew 3pc last year and was forecast to grow about 2.8pc this year, twice the average of the OECD developed nations. Unemployment is 2.6pc, less than half the rate of mainland UK. The Manx government, which is responsible for its own finances and taxation policy, plans to spend £540m this year, representing 23pc of gross domestic product. The current budget deficit is nearly £50m, but Mr Teare expects the budget to be in balance again by 2015-6. The island has retained its AAA credit rating from Moody's, although mainland UK was downgraded earlier this month to AA1, and is rated AA+ from Standard and Poor's, which downgraded the island from AAA in 2011. Indirect taxes such as VAT, petrol and alcohol duties are more or less the same as mainland UK, but income tax is much lower. The standard rate remains at 10pc and the top rate at 20pc. The amount of income tax payable by the highest earners is capped at £120,000 per year for an individual and £240,000 per year for a married couple. Less than 80 high earners benefit from this "cap" while the top 10pc of earners contribute 59pc of income tax. Nearly one in three Manx earners pay no income tax at all thanks to generous tax allowances. One surprise measure in the Budget was a 10pc corporation tax rate for retailers who generate more than £500,000 taxable profits. But the standard rate of company tax remains at zero. Meanwhile, from this March onwards, the Isle of Man authorities will automatically exchange information with the UK tax authorities on UK residents holding Manx savings and investments, under a deal struck between both governments earlier this month. This arrangement will be incorporated into the long-standing double taxation agreement between the two countries. The UK tax authorities have also granted a temporary three-year "amnesty" which allows UK residents with undisclosed Manx investments to escape prosecution in return for paying back tax plus a 10pc penalty charge. Mr Teare said: "The Isle of Man has long made clear that it considers automatic exchange of information to be the emerging standard. This agreement with the UK is a well-considered next step in the Island's long-established policy of being at the forefront of tax transparency and international cooperation. The deal also puts pressure on Jersey and Guernsey to allow similar arrangements with the UK government.