Gibraltar Location

5.7 Allowance-based system

5.7.1 Tax rates

The below bands and rates are in force for both 2016-17 and 2015-16. For both those tax years, all taxpayers under the ABS receive a tax credit amounting to the greater of £300 or 2% of the tax payable based on the below table.

2015-16 2014-15
Taxable Income Bands Rate% Tax on Band Rate% Tax on Band
On first £4,000 14% £560 15% £600
On next £12,000 17% £2,040 18% £2,160
On remainder 39% 40%

When an individual moves to or from Gibraltar and/or takes up or ceases employment in Gibraltar, rules are applied that result in the apportionment of tax bands and allowances (see Section 5.11.1).

5.7.2 Principal allowances & Reliefs

The following are the principal allowances and reliefs available to individuals for the tax year 2016-17 (from 1 July 2016 to 30 June 2017). They also apply to 2015-16 unless otherwise indicated. These figures are based on the Budget Measures announced by the Gibraltar Government on 5 July 2016 and may be affected by subsequent legislation. Appendix 6.2 provides an eight-year summary of the principal allowances and reliefs.

Personal allowances

An unmarried or single taxpayer is entitled to a personal allowance of £3,215 (2015-16: £3,200). An individual who has a spouse, either living with or maintained by them, is entitled to a spouse allowance of £3,215 (2015-16: £3,200).This is subject to the proviso that only one of the spouses may claim the spouse allowance. Taxpayers who prove that they pay alimony to their wife or former wife may opt forthe single taxpayer’s allowance and, in addition, deduct the alimony actually paid up to a maximum of £3,215 (2015-16: £3,200).

Individuals whose total allowances are less than £4,103 have their personal allowances “topped up” to that amount.

Elderly persons (men aged 65 years or above and women aged 60 years or above) have their allowances “topped up” to £12,030 irrespective of the level of assessable income.

Other allowances and reliefs
Child relief

With respect to the first of any children of the taxpayer (including a stepchild or adopted child) who meets the criteria set out below, the taxpayer is entitled to a deduction of £1,105 (2015-16: £1,100). The relief is increased to £1,255 (2015-16: £1,250) with respect to each child educated outside Gibraltar.

The relief is given to an unmarried child who was:

If the child’s income in their own right, exclusive of any income from a scholarship, bursary or other educational allowance and earnings from employment at an approved educational establishment, exceeds the specified reliefs, no relief is given unless another child of the claimant meets the criteria. However, the income received by a student from a holiday job during school or university vacations is exempt from income tax.

If an individual proves to the satisfaction of the Commissioner that they have paid maintenance for a child under a court order or deed of separation maintenance to a child, the individual is entitled to claim a deduction from assessable income of the amount of maintenance so paid, up to a maximum of £997 (NB, this may increase in line with child relief to £1,105, but was not made clear in the budget).

Disabled person relief

With respect to each disabled unmarried individual, the parent is entitled to relief in the amount of £9,040 (2015-16: £9,000). In order for a parent to qualify for the relief, the disabled individual must be suffering from specific bodily or mental disability, be residingwith the parent and is either eligible for a disability allowance paid by the Gibraltar Government, or would be eligible for a disability allowance if they satisfied the five-year residency period required for a disability allowance.

Nursery school allowance

An allowance of £5,025 (2015-16: £5,000) is available to ordinarily resident individuals with respect to each child attending a private registered nursery during the preschool academic year.

Relief with respect to individuals taking charge of children (single parent’s allowance) A relief of £5,290 (2015-16: £5,264) is given to a man who is not entitled to a deduction for a spouse, or to a woman with respect to whom no man is entitled to claim such a deduction,* who has the custody of, and maintains during the year of assessment, an unmarried child for whom a deduction for child allowance is available. This only applies if the taxpayer is an ordinarily resident in Gibraltar.

Low-income earner’s tax credit

Individuals with income of less than £11,050 (2015-16: £11,000) are entitled to an additional allowance so that no tax is payable by them. An individual whose annual assessable income falls within £11,051 and £19,500 will be entitled to claim a low income earners allowance as follows:

Dependent relative relief

A relief of £305 (2015-16: £300), or £205 for non-residents (2015-16: £200) is available to a claimant with respect to a relative of the claimant or of their spouse who is incapacitated by old age or infirmity from maintaining herself (if the relative is a widowed mother, then whether incapacitated or not), whose income from all sources does not exceed £2,812 (subject to confirmation at the time of writing) and who is maintained by the claimant at their own expense.

The relief is reduced by the excess of the dependent’s total income from all sources over a certain amount and is restricted if the dependent is not a resident of Gibraltar.

Deduction for blind person

An allowance of £5,020 (2015-16: £5,000) is available to an individual who proves to the satisfaction of the Commissioner, by producing a certificate signed by a qualified medical practitioner, that the individual or their spouse has effectively lost their sight.

Disabled individuals’ tax allowance

An additional earned income allowance effectively exempts individuals in employment from tax, if they are recipients of disability allowance paid by the Department of Social Security.

Deduction for purchase or construction of a house or flat

Individuals ordinarily resident in Gibraltar who purchase or enter into an agreement to purchase, construct, or are in the process of constructing a house or flat in Gibraltar for their own residential occupation, are entitled, in any one or more years of assessment, to claim a deduction or deductions from their taxable income, or that of their spouse, or of both*, in whichever proportion is most beneficial. The following restrictions apply:

  1. Deduction is only granted once and is not granted for more than one dwelling at any one time.
  2. Deduction is only allowed for any payment or payments made toward the purchase or construction of the dwelling.
  3. Deduction amount cannot, in any year of assessment, exceed the aggregate amount paid by the individual toward the purchase or construction of the dwelling.

The “aggregate amount” mentioned in point 3 includes:

Further restrictions apply where the spouse of the taxpayer is taxed under the GIBS (see Section 5.5).

*If also taxed under the ABS

Once the right to the deduction has been established, the taxpayer may choose over how many tax years they wish to spread the deduction.

The allowance is claimed back if the taxpayer relinquishes the legal estate of the dwelling with respect to which the deduction has been granted within 12 months of obtaining it or if the taxpayer ceases to reside in the dwelling within 12 months of obtaining the legal estate.

The deduction is available, determined as above, for accommodation occupied or being constructed for each child of the taxpayer subject to certain provisos concerning occupation by that child and the stipulation mentioned above concerning disposal within 12 months.

Interest relief on loans for the purchase, improvement or development of property

Interest paid by an individual or their spouse who occupies property in Gibraltar for residential purposes on a loan to defray money applied in purchasing or on improving or developing that property is allowable, subject to the following restrictions:

Restrictions also apply where the spouse of the taxpayer is taxed under the GIBS (see Section 5.5).

Interest relief on loans for the purchase or construction of a parking bay or garage Interest paid by an individual on a loan to purchase or construct a garage or parking bay in Gibraltar is allowable against the assessable income of that person, their spouse or of both in whichever proportion is most beneficial.

Approved expenditure on premises

This deduction, which is described in Section 5.3.5, also applies to individuals, whether as part of the business of a self-employed person, or with respect to property held for nonbusiness purposes.

Life insurance relief

Premiums or contributions (or both) payable during the year of assessment are allowable as a deduction, subject to the following restrictions.

The deduction is given with respect to premiums payable by the claimant for an insurance contract on the claimant’s or spouse’s life. However, relief is restricted to:

In order to allow members of these schemes to top up unused tax relief, a one-year carryback provision has been introduced for contributions made from 1 July 2012 onward.

Contributions by the employer to approved personal pension schemes are not taxable on the employee as a benefit in kind. This exemption does not apply to retirement annuity schemes.

Pension contributions: occupational pension schemes

In case of other employees, the maximum tax relief available with respect to contributions is the difference between one-sixth of the taxpayer’s assessable income and any deduction for life assurance premiums already claimed (the deduction for life assurance premiums being restricted to one-seventh of assessable income).

Contributions by the employer are not taxable on the employee as a benefit in kind.

Pension contributions: other

A deduction is available in respect of contributions to a pension scheme, provident society or fund approved by the Commissioner, with such contributions not being related to a statutory pension scheme, or personal pension scheme. The deduction available, together with any deduction for life insurance premiums (see above), is restricted to:

Medical insurance allowance

The first £5,020 (2015-16: £5,000) of eligible premiums paid in the tax year by a taxpayer to an approved medical insurance scheme providing health insurance for the taxpayer, spouse or dependent children is fully allowable from the taxpayer’s assessable income.