Gibraltar tax rates and allowances

Gibraltar personal tax rates
and allowances

The personal tax regime in Gibraltar allows ordinarily tax resident individuals to choose between being taxed under the allowance or gross based system. The advantage for these individuals is that they can choose the tax regime which gives them the lower overall tax outcome.

Gibraltar Personal tax rates for 2016/2017

Gibraltar tax year

The tax year in Gibraltar commences on the 1st July and ends on the following 30th June each year.

Liability to tax in Gibraltar

Liability to Gibraltar taxation is generally based on income “accrued or derived” in Gibraltar. Individuals who are “ordinarily resident” in Gibraltar are generally liable to Gibraltar tax on a worldwide basis.

Gibraltar tax residency

The Income Tax Act 2010 states that an individual is deemed to be “ordinarily resident” in Gibraltar if they are present in any year of assessment for either:

* 183 days; or
* 300 days over a three year consecutive period.

With regards to how these days are counted the rules confirm that if you are physically present for any part of a 24 hour period commencing at midnight then this shall be counted as a day of presence irrespective of whether any accommodation is used in Gibraltar.

In addition to these rules, it is also possible to be tax resident in Gibraltar if you have a special residency status such as Category 2 residency.

Gibraltar tax rates

Ordinarily tax resident individuals have the choice of being taxed under one of two income tax systems (covered in detail below). These two systems operate in parallel to each other and it is possible to opt to use the system which gives you the lower tax outcome.

The gross income based system

The gross income based system allows you to choose a flat tax rate but with only specific deductions in relation to medical insurance, pensions and purchase of your main residence.

The tax rates for the gross income based system are summarised below:

For individuals earning up to £25,000:

6% on first £10,000

20% on next £7,000

28% on balance

For Individuals earning over £25,000:

16% : on first £17,000

19% : £17,001 – £25,000

25% : £25,001 – £40,000

28% : £40,001 – £105,000

25% : £105,001 – £500,000

18% : £500,001 – £700,000

10% : £700,001 and over

The allowance based system

The tax rates of the allowance based system are as follows:

The first £4,000 of taxable income 14%
The next £12,000 of taxable income 17%
The remainder of taxable income 39%

All allowance based taxpayers benefit from an automatic tax cut based on the higher of £300 or 2% of the tax bill.

Personal Allowances and Tax reliefs

Personal allowance £3,215
Married allowance £3,200
Single parent allowance £5,290
Nursery School Allowance (per child) £5,025
Child Relief (first child) £1,105
Child Relief (for each child educated abroad) £1,255
Social Insurance – Employee £335
Social Insurance – Self employed £432
Disabled Person Relief £9,040
Dependent Relative (max.) £305
House Purchase Allowance £12,000
House Purchase Special Allowance (£1,000 max p.a.) £4,000
Medical Insurance Allowance £5,020
Blind Person £5,020

Other Personal allowances and tax reliefs

Low income taxpayers: Those who earn income for the tax year is less than £11,050 will pay no tax on this income. Taxpayers who earn between £11,051 to £19,500, benefit from tapering allowances.

Life Assurance Premiums: These are fully allowable provided they do not exceed 1/7 of assessable income or 7% of the capital sum assured at death.

Mortgage Interest: Allowable on residential property occupied by the taxpayer on loans of up to £350,000.
Pension Contributions: Premiums made to approved personal or occupational pension schemes are allowable subject to limits.

Bank & building society deposit interest and income from quoted investments: Tax free.

Gibraltar Government Debentures investments: Exempt from income tax.

Social Insurance

Calculated on gross earnings as follows:

 Weekly contributions Employee Max. Employer Max.
Employed (under 60) 10% £25.16 20% £32.97
Employed (60 & over)  20% £32.97
Self employed 20% £30.17