The key figures
| What | Figure | Source |
|---|---|---|
| Tax year | 1 July to 30 June | Income Tax Office |
| Gross Income Based System (income over £25,000) | 16% to 28% | Rates of Tax Rules 1989, rule 3A |
| Allowance Based System | 14%, 17%, 39% | Rates of Tax Rules 1989, rule 2 |
| Employee social insurance (from 1 July 2026) | 10%, max £40.79 a week | Income Tax Office, SI classes 2026/27 |
| Income below which no tax is due | £11,450 | Allowances Rules 1992, rule 16E |
| Transaction Tax (replaced import duty, 15 July 2026) | 15% in 2026 | Chief Minister's Budget Address 2026 |
Gibraltar taxes employment income through PAYE, with two systems to choose from: the Gross Income Based System (GIBS), which taxes your gross income at lower rates with almost no deductions, and the Allowance Based System (ABS), which taxes income after allowances at 14%, 17% and 39%. You don’t have to work out which is better: the Income Tax Office assesses you on whichever results in less tax. Employees also pay social insurance of 10% of earnings, capped at £40.79 a week. The tax year runs from 1 July to 30 June. There is no VAT, but since 15 July 2026 a Transaction Tax of 15% has replaced import duty.
The Gross Income Based System (most employees)
| Income over £25,000 | Rate |
|---|---|
| First £17,000 | 16% |
| Next £8,000 | 19% |
| Next £15,000 | 25% |
| Next £65,000 | 28% |
| The rest (above £105,000) | 25% |
| Income of £25,000 or less | Rate |
|---|---|
| First £10,000 | 6% |
| Next £7,000 | 20% |
| The rest | 28% |
From the Rates of Tax Rules 1989, rule 3A, as cut from 1 July 2024; we found no change for 2026/27. The official HEPSS figure confirms the bands: tax on exactly £160,000 is £39,940. Under GIBS the only deductions are mortgage interest (up to £1,500 a year), the home purchase allowance (up to £7,500), approved pension contributions (up to £1,500) and approved medical insurance (up to £3,000) (Income Tax Office).
The Allowance Based System
Taxable income (your income minus allowances) is taxed at 14% on the first £4,000, 17% on the next £12,000 and 39% on the rest (rule 2). The main allowances published by the Income Tax Office, labelled 2025/26, are a personal allowance of £3,455 (the same for a spouse or civil partner), £1,190 for a child, £5,800 for a single parent, medical insurance up to £5,395, nursery fees up to £5,480 and mortgage interest on up to £350,000 borrowed. The Budget in July 2026 said allowances would rise, but as of 28 October 2026 no new figures had been published, so check the PAYE page for updates.
The ABS tends to suit people with large allowances (children, a mortgage, medical insurance) and lower incomes; the GIBS suits most single people on average pay and above.
Low incomes
Income of £11,450 or less isn’t taxed at all, and relief tapers off for incomes up to £19,924 (Allowances Rules, rule 16E). If your employer doesn’t have a tax code for you, it must deduct 20%.
A worked example: the average salary
Average gross annual earnings across all employee jobs were £39,510.90 in October 2025 (Employment Survey Report 2025). For a single person on £39,511 with no GIBS deductions:
| A year | Amount |
|---|---|
| Gross pay | £39,511 |
| Income tax under GIBS (16% of £17,000 + 19% of £8,000 + 25% of £14,511) | -£7,867.75 |
| Employee social insurance (10%, capped at £40.79 a week) | -£2,121.21 |
| Take-home pay | about £29,522 |
Our calculation from the official rates: income tax is 19.9% of gross pay. Under the ABS with basic allowances the tax would be higher, so the Income Tax Office would use GIBS. Your own figure depends on your allowances; the Income Tax Office publishes a calculator.
Social insurance
From 1 July 2026, employees pay 10% of gross earnings, at least £14.34 and at most £40.79 a week (£2,121.21 a year), and employers 18%, between £31.98 and £56.22 a week. Employees reach the cap at about £408 a week. Employees aged 60 or over pay nothing; their employer still pays. Contributions count towards the old age pension, maternity and unemployment benefit and healthcare under the Group Practice Medical Scheme (Income Tax Office).
HEPSS and Category 2
HEPSS (High Executive Possessing Specialist Skills) is for people who will earn more than £160,000 a year in a senior post and haven’t lived or worked in Gibraltar in the previous 36 months. They’re taxed on exactly £160,000 under GIBS, £39,940 a year, however much they earn, and need approved accommodation. The application fee is £1,264 from 1 August 2026 (HEPSS Rules).
Category 2 status is for wealthy individuals who move to Gibraltar: tax applies to the first £118,000 of taxable income only, at ABS rates, with a minimum of £37,000 a year. The application fee rose to £5,000 in June 2026, and the Government announced that the minimum net wealth for new applicants rises from £2 million to £5 million (Category 2 Rules; press release 469/2026). The Government says the status doesn’t give entitlement to publicly funded schooling or healthcare.
VAT, the Transaction Tax and other taxes
Gibraltar has no VAT, no capital gains tax and no estate duty. Under the UK-EU treaty, which has applied provisionally since 15 July 2026, it brings “certain rates closer to those in the EU, without adopting VAT or any form of sales tax” (GOV.UK). In practice import duty has been replaced by a Transaction Tax: 15% this year, 16% next year, and the Government expects 17% from the third year (Budget Address 2026).
If you live in Spain
Gibraltar taxes pay earned in Gibraltar wherever you live, through PAYE. If you’re tax resident in Spain, Spain also taxes your worldwide income and gives credit for the Gibraltar tax. Spain removed Gibraltar from its list of tax havens on 27 June 2026. Details on frontier workers.
Limits
General information from the official rules, not tax advice. Allowances for 2026/27 hadn’t been published when we checked (28 October 2026); we’ll update this page when they are. For pay, see the minimum wage and working in Gibraltar.
Questions
What is the income tax rate in Gibraltar?
It depends on the system. Under the Gross Income Based System, income over £25,000 is taxed at 16% on the first £17,000, 19% on the next £8,000, 25% on the next £15,000, 28% on the next £65,000 and 25% on the rest; income up to £25,000 at 6%, 20% and 28%. Under the Allowance Based System, taxable income after allowances is taxed at 14%, 17% and then 39%. The Income Tax Office assesses you on whichever costs less.
Is Gibraltar a tax haven?
Gibraltar taxes salaries: an average earner pays about 20% of gross pay in income tax, plus social insurance. It has no VAT, no capital gains tax and no estate duty, and special schemes cap tax for wealthy new residents (Category 2) and top executives (HEPSS). Spain removed Gibraltar from its list of tax havens on 27 June 2026, saying it now exchanges tax information effectively with Spain.
What is HEPSS in Gibraltar?
High Executive Possessing Specialist Skills status, for people who will earn more than £160,000 a year in a senior post in Gibraltar and haven't lived or worked there in the previous 36 months. They are taxed on exactly £160,000 under the Gross Income Based System: £39,940 for a full year. They need approved accommodation, and the application fee is £1,264 from 1 August 2026.
Does Gibraltar have VAT?
No. But since 15 July 2026 Gibraltar charges a Transaction Tax, which replaced import duty as part of the UK-EU treaty on Gibraltar: 15% this year, 16% next year, and the Government expects 17% from the third year. The treaty brings Gibraltar's indirect taxes closer to EU rates without adopting VAT.
How much tax will I pay on £40,000 in Gibraltar?
On our calculation, a single person on £40,000 with no pension or mortgage deductions would pay £7,990 in income tax under the Gross Income Based System (16% of £17,000, 19% of £8,000 and 25% of £15,000), plus employee social insurance capped at £2,121.21 a year, leaving about £29,889. The Income Tax Office's own calculator will confirm your figure.
More on working in Gibraltar
- Working in Gibraltar: the overview, with pay, tax and the rules in one place
- Jobs in Gibraltar: Live listings, where the 32,206 jobs are, pay by industry, the gaming firms and work permit rules
- Frontier workers: Living in Spain and working in Gibraltar: the treaty, the border, Schengen, tax and healthcare
- Gibraltar residency: The Residency Regulations 2026: who needs a permit, the salary and housing rules, fees, and ID cards
- Moving to Gibraltar: The steps to move, the housing open to newcomers, prices against pay, and the Spanish alternative
- Minimum wage in Gibraltar: £10.00 an hour from 1 August 2026, one rate from age 15, with weekly, monthly and yearly figures
- Bank holidays in Gibraltar: Every bank and public holiday in 2026 and 2027, from the official Orders, with the days moved off weekends
Sources
- Income Tax Office, Income Tax for Individuals (checked 28 October 2026)
- Income Tax (Rates of Tax) Rules 1989, version of 1 July 2024 (1 July 2024)
- Income Tax (Allowances, Deductions and Exemptions) Rules 1992, version of 23 March 2026 (23 March 2026)
- Income Tax Office, PAYE and allowances (checked 28 October 2026)
- Income Tax Office, Tax Return Guidance 2026 (2026)
- Income Tax Office, Social Insurance Contribution Class from 1 July 2026 (July 2026)
- High Executive Possessing Specialist Skills Rules 2008 and (Amendment) Rules 2026 (in force 1 August 2026)
- Qualifying (Category 2) Individuals Rules 2004 and (Amendment) Rules 2026 (amended 22 June 2026)
- HM Government of Gibraltar, changes to the Category 2 regime (press release 469/2026) (18 June 2026)
- HM Government of Gibraltar, The Chief Minister's Budget Address 2026 (press release 536/2026) (7 July 2026)
- Ministerio de Hacienda, update of the list of non-cooperative jurisdictions (27 June 2026)
- GOV.UK, Summary of the draft UK-EU Agreement in respect of Gibraltar (26 February 2026)