Gibraltar income tax is charged under two parallel systems, the Allowance Based System and the Gross Income Based System, and the Income Tax Office assesses you under whichever produces the lower bill. Under the gross system, rates run from 6% to 28%, and income above £105,000 is taxed at 25%. The tax year runs from 1 July to 30 June, employees pay through PAYE, and personal returns are due by 30 November.
At a glance
| Topic | Position for 2026/27 |
|---|---|
| Tax year | 1 July 2026 to 30 June 2027 |
| Systems | Allowance Based System or Gross Income Based System, whichever is lower |
| Gross system rates | 6% to 28%; 25% on income above £105,000 |
| Tax residence | 183 days in a tax year, or more than 300 days over three consecutive years |
| Return deadline | 30 November after the tax year ends, filed electronically |
| Employee social insurance | 10% of earnings, £14.33 to £40.79 a week |
| Capital taxes | No general capital gains, inheritance, wealth or gift tax |
How does Gibraltar income tax work?
Gibraltar taxes income that accrues in or derives from Gibraltar, such as local salaries, self-employed profits and rent from Gibraltar property. If you are ordinarily resident, some income from abroad can also be taxed, and local firms note that unilateral relief is available where foreign tax has already been paid.
Every individual is, in effect, calculated twice. You do not need to choose a system: the Income Tax Office applies whichever produces the lower liability. As a rule of thumb, the Allowance Based System helps people on modest incomes with large allowances, such as a family with a mortgage and children, while most middle and higher earners end up on the gross system.
Budget 2026, delivered in July 2026, made no change to personal tax rates. EY’s summary of the Budget notes the Government’s position that the effective overall rate for resident individuals does not exceed 25%. For the wider picture of living and working locally, start at the residency and living hub.
What are the Gross Income Based System rates?
The gross system taxes your income with only a short list of capped deductions. There are two rate tables, depending on whether your gross income is above or below £25,000.
| Gross income up to £25,000 | Rate |
|---|---|
| First £10,000 | 6% |
| Next £7,000 | 20% |
| Balance | 28% |
| Gross income above £25,000 | Rate |
|---|---|
| First £17,000 | 16% |
| £17,001 to £25,000 | 19% |
| £25,001 to £40,000 | 25% |
| £40,001 to £105,000 | 28% |
| Above £105,000 | 25% |
The deductions allowed under this system are capped, according to PwC’s summary reviewed in August 2026:
- mortgage interest on your main home, up to £1,500 a year;
- pension contributions, up to £1,500 a year;
- private medical insurance premiums, up to £3,000 a year;
- approved first-home purchase costs, up to £7,500;
- approved property frontage works, up to £5,000;
- solar or renewable energy installations, up to £6,000 over two years.
What are the Allowance Based System rates and allowances?
The allowance system starts from your income, subtracts personal allowances and reliefs, then applies three bands.
| Taxable income | Rate |
|---|---|
| First £4,000 | 14% |
| Next £12,000 | 17% |
| Above £16,000 | 39% |
The main allowances for 2026/27, as listed by PwC and the Income Tax Office, are:
| Allowance or relief | Amount |
|---|---|
| Personal allowance | £3,455 |
| Spouse or civil partner | £3,455 |
| One-parent family | £5,800 |
| Each child | £1,190 |
| Nursery school allowance | £5,480 |
| Medical insurance premiums | Up to £5,395 |
| Mortgage interest on your home | Interest on loans up to £350,000 |
If your income is £11,450 or less, no tax is payable. Tapering relief then applies up to £19,950 according to EY and Sovereign (PwC’s summary gives £19,500), so check the exact limit with the Income Tax Office if your income falls near it. EY’s 2025/26 tax facts also describe a top-up of total allowances to £4,343 for every taxpayer, and to £12,645 for men aged 65 or over and women aged 60 or over.
Allowances are reduced by one-twelfth for each complete month you are not resident in Gibraltar, which matters in the years you arrive and leave.
Who is tax resident in Gibraltar?
You are ordinarily resident for tax purposes if you are present in Gibraltar for 183 days or more in a tax year, or for more than 300 days in total across three consecutive tax years. Domicile is not the test: non-Gibraltarians can be, and usually are, tax resident once they live there.
Ordinarily resident individuals face tax on certain foreign income, including foreign employment income and some imported pensions. Non-residents are taxed only on Gibraltar-source income, and people who work in Gibraltar for fewer than 30 days in a year can have tax on that work reimbursed.
Two other rules catch newcomers:
- Passive income. Since July 2022, residents who are not Gibraltarian, hold neither Category 2 nor HEPSS status and are not in genuine third-party employment are taxed on savings, pension and other passive income, without the benefit of the lower bands. For everyone else, bank interest and dividends from listed companies are generally exempt.
- Spain. The 2019 UK–Spain agreement on taxation relating to Gibraltar decides residence for people with ties to both places. For example, you are treated as Spanish resident if you spend more than 183 nights a year in Spain or your only permanent home is there. If you live in Spain and work in Gibraltar, read working across the frontier after the treaty.
How much social insurance will you pay?
Social insurance is separate from income tax and is charged weekly on earnings. The rates below have applied since 1 July 2025 under LN 2025/120, and Budget 2026 left them unchanged.
| Contributor | Rate | Weekly minimum | Weekly maximum |
|---|---|---|---|
| Employee (under 60) | 10% | £14.33 | £40.79 |
| Employer | 18% | £31.97 | £56.22 |
| Self-employed | 20% | £30.45 | £53.55 |
| Voluntary contributor | Flat | £40.79 | £40.79 |
Employees aged 60 or over pay no employee contributions, although their employer still pays. From 1 July 2026 the state pension age for men fell from 65 to 60, matching women. Contributions are the usual basis for public healthcare registration; the details are in our guide to working in Gibraltar.
How do PAYE and tax returns work?
If you are employed, your employer deducts income tax through PAYE each pay period and passes it to the Income Tax Office. At the end of the tax year the employer files a return of pay and tax deducted for every employee.
Individuals still have their own filing duty:
- Get a tax reference. New arrivals receive a taxpayer reference number from the Income Tax Office, usually when they first start work or register as self-employed.
- File your return by 30 November. The return covers the tax year that ended on 30 June. The Income Tax Office says returns must now be submitted electronically and no longer accepts paper. Its online return service was temporarily down for maintenance in October 2026, and it published an editable PDF return for 2026 in the meantime.
- Pay any balance. You calculate your liability and pay what is due with the return.
- Make payments on account if you are not on PAYE. Self-employed people and others with non-PAYE income pay two instalments, each normally 50% of the previous year’s tax, by 31 January and 30 June, with the balance by 30 November.
Penalties apply for lateness. According to PwC’s summary, a late return draws an initial £50 fine with further amounts if it stays outstanding for more than three and six months, and unpaid tax attracts a 10% surcharge, rising to 20% after a further 90 days.
How are pensions taxed?
Pensions from Gibraltar statutory, provident or other approved schemes are taxed at 0% for members aged 60 or over (55 for some former essential services staff), and are left out when tax on your other income is worked out. Sovereign’s 2025/26 tax guide puts income from a Gibraltar imported pension, such as a QROPS, or a QNUPS at 2.5%.
Working pensioners over 60 whose pension is no more than £6,000 a year can claim a tax credit of up to £4,000 against tax on earned income. Foreign pensions are more complicated, especially for newcomers caught by the 2022 passive income rule, and the UK–Gibraltar double taxation agreement allows pensions to be taxed in the territory where they arise. Our guide to retiring to Gibraltar covers this in more depth.
How do Category 2 and HEPSS change your tax?
Two special statuses cap the income on which you are taxed. Both are tax certificates, not rights of residence, and each has its own application process and fee.
| Category 2 | HEPSS | |
|---|---|---|
| Aimed at | Wealthy individuals living on assets | Senior executives employed in Gibraltar |
| Income taxed | First £118,000 | First £160,000 |
| System used | Allowance Based System | Gross Income Based System |
| Annual tax | £37,000 minimum, £42,380 maximum | £39,940 |
| Government fee | £5,000 | £1,264 |
Category 2 residency also leaves out foreign dividends, pensions and employment income unless you choose to include them, and the Government announced a £5 million wealth test for new applicants in June 2026. HEPSS for senior executives requires a Gibraltar salary of more than £160,000.
What changed with the 2026 UK–EU treaty
The UK–EU treaty, provisionally applied since 15 July 2026, does not set personal tax rates or change how Gibraltar taxes individuals. Where you are tax resident still depends on Gibraltar law, Spanish law and the 2019 UK–Spain agreement. The treaty’s practical effect is on daily life, such as the open land border and social security coordination for frontier workers, rather than on the rate you pay.