Gibraltar has no VAT, no capital gains tax and no inheritance tax, and income tax is lower than in the UK. That's a big part of why people move here. This guide explains how income tax works for people who live and work in Gibraltar.
The tax year
Gibraltar's tax year runs from 1 July to 30 June, not April to April as in the UK.
Two ways to be taxed
Gibraltar has two income tax systems: the Allowance Based System and the Gross Income Based System. Each year you're taxed under whichever one gives you the lower bill.
Gross Income Based System
This is the simpler system. It has very few allowances, but the rates are lower. If your income is £25,000 or less:
| Taxable income | Rate |
|---|---|
| First £10,000 | 6% |
| Next £7,000 | 20% |
| The rest | 28% |
If your income is over £25,000 (and up to £100,000):
| Taxable income | Rate |
|---|---|
| First £17,000 | 16% |
| Next £8,000 | 19% |
| Next £15,000 | 25% |
| Next £65,000 | 28% |
| The rest | 25% |
A few deductions are still allowed, for example mortgage interest on your home, pension contributions and medical insurance, each up to a limit.
Allowance Based System
Here you first take off allowances (personal, spouse, children, nursery fees and others), then pay tax on what's left:
| Taxable income | Rate |
|---|---|
| First £4,000 | 14% |
| Next £12,000 | 17% |
| The rest | 39% |
The higher top rate means this system usually suits people on lower incomes with large allowances, such as families.
Social insurance
As well as income tax, employees and employers pay social insurance contributions. They're worked out as a percentage of earnings, with a weekly minimum and maximum. Your employer takes them from your pay along with your income tax (PAYE).
Taxes Gibraltar doesn't have
- No VAT. Instead, from 15 July 2026 a new Transaction Tax replaced import duty on goods: 15% in its first year, then 16%, then at least the EU's lowest VAT rate (17% today). It doesn't apply to ordinary services.
- No capital gains tax, so you don't pay tax when you sell your home at a profit.
- No inheritance tax, wealth tax or gift tax.
High earners and wealthy new residents
Two special schemes cap the tax bill for people who qualify:
- Category 2 is for wealthy individuals moving to Gibraltar. You're taxed only on the first £118,000 of your income. See our Category 2 guide.
- HEPSS (High Executive Possessing Specialist Skills) is for senior people with skills that are in short supply. You pay tax only on the first £160,000 of employment income.
Sources
- PwC Worldwide Tax Summaries: Gibraltar, taxes on personal income (reviewed August 2026)
- EY: Gibraltar issues Budget 2026
- Gibraltar.com: tax facts
- HM Government of Gibraltar
Checked October 2026. This is a general guide, not tax advice. Speak to a Gibraltar accountant about your own situation.
