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Businesses

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Businesses

The Tax Year runs from 01 July to 30 June in any year.

QUESTIONS

Q. How do I register my business?
Q. I have registered my business with the Income Tax Office, what happens next?
Q. Can I own a business and also be a PAYE employee?
Q. Who is chargeable to tax on the business profit?
Q. Can I have employees under my business?
Q. How do I register as an employer?
Q. How do I register employees?
Q. What do I need to do when an employee’s contract is terminated?
Q. What are my obligations as a Business owner/Employer in respect of Tax and Social Insurance?
Q. When do I submit accounts for my business?
Q. Do I need to submit accounts if my business has not traded or made a loss?
Q. What do I need to do if my business has ceased trading?
Q. What are the important dates?
Q. What records should I keep?
Q. Why do I need to keep records?
Q. For how long do I need to keep records?
Q. What expenses can I claim as deductions?
Q. What expenses are not allowed as deductions?

Q. How do I register my business?

A. To register a business you need to do the following:

  • Obtain a business name registration certificate from Companies House Gibraltar.
  • Submit a complete Self-Employed registration form for each partner in the business together with a copy of your ID card or Passport.Form S 1

Q.  I have registered my business with the Income Tax Office, what happens next?

A.      Once you register at the Income Tax Office, you are required to submit an application form to the Ministry of Employment.  Once the Ministry approves your registration, the Income Tax Office will finalise the registration process and a registration pack will be dispatched to you via post.

Q. Can I own a business and also be a PAYE employee?

A. Yes you can, however, you need to register as a self –employed individual as explained above.

Q. Who is chargeable to tax on the business profit?

A. The business as an entity is not chargeable to tax. The partners will be individually assessed on their share of the business profits.

Q. Can I have employees under my business?

A. Yes you can however you need to register as an employer for PAYE purposes.

Q. How do I register as an employer?

A. You are required to submit to the Income Tax Office copies of the following:

  • Employment Registration Certificate.
  • Certificate of Incorporation issued by Companies House Gibraltar.
  • These should be submitted under cover of a letter addressed to the Commissioner of Income Tax requesting that the business be registered for PAYE purposes.

Q. How do I register employees?

A. You are required to submit a copy of the employees contract together with a copy of the tax form P7A part 3 from the individuals previous employment in Gibraltar (if applicable).
You can find the forms in the downloads section.

Q. What do I need to do when an employee’s contract is terminated?
A. The employer must submit to the Tax Office form P7A part 1 and supply the employee with a copy of the P7A parts 2 and 3.
You can find the forms in the downloads section.

Q. What are my obligations as a Business owner/Employer in respect of Tax and Social Insurance?

A.

  • All employees must be fully registered with the Income Tax Office and supplied with a relevant tax code.
  • Income Tax and Social Insurance must be deducted as per the individuals tax code and remitted to this office by no later than the 15th day of every month.
  • Forms P8 (Employers Annual Declaration), P10/P10A (Benefit in Kind Declaration)/( Benefit in Kind Tax paid by Employer) and P12 (Pension Scheme Contribution) must be properly completed and submitted by the 31st July of every tax year.
  • A completed P7A form must be provided to every employee on termination of employment.
  • A completed P7 form must be provided to every employee at the end every tax year.

You can find the forms in the downloads section.

Q. When do I submit accounts for my business?

A. The business tax year runs from 1 July to 30 June. Accounts may be submitted as soon as the tax year ends and by no later than the 30 November.

Q. Do I need to submit accounts if my business has not traded or made a loss?

A.

  • If your business has not traded for a period, an explanatory letter must be submitted in place of accounts.
  • If your business has made a loss for the year, accounts must be submitted.

Q. What do I need to do if my business has ceased trading?

A. 

  • Complete a self-employed cessation form.Form S 5
  • Submit accounts to date of cessation.

You can find the forms in the downloads section.

Q. What are the important dates?

Link to front page of self-employed tax at a glance leaflet.

Q. What records should I keep?

A. You are required to keep records of all your business transactions, including the following:

  • Documentation in respect of any assets (stock, equipment, etc) purchased for your trade/ business.  You should also keep a detailed record of any plant, machinery or equipment for trade/business use which you buy or sell.  These are capital items for tax purposes and you may be able to claim Capital Allowances as a deduction against your profit, thereby reducing your tax liability
  • Sales invoices
  • Stock inventories, value of stock (stock-take) and work-in-progress at the end of your accounting period
  • Details of payments to employees (e.g. wages, expenses, benefits)
  • Business vehicle and travel costs and mileage records
  • All other income e.g. money you invest in your trade/ business
  • Purchase receipts
  • Electronic records of sales or till rolls
  • Details of items not rung through the till
  • Cash book
  • Petty cash book
  • Sales and purchase ledgers
  • Bank statements
  • Cheque book stubs
  • Bank paying-in slips.

 

Q.  Why do I need to keep records?

A.  Keeping up-to-date and accurate records from the date you start your business is essential because: - it makes it easier for you, or your accountant, to complete your year-end accounts in a timely manner, preventing delays in submission of your complete tax return, thereby avoiding incurring late filing penalties; - the income or profit declared in your tax return will be accurate; - you can keep track of your expenditure; and - it will facilitate you clarifying any queries that may be raised by the Tax Office on examination of your accounts.

Q.  For how long do I need to keep records?

A. Records should be kept for at least six years.

Q. What expenses can I claim as deductions?

A.  Most items of expenditure are generally allowed as deductions against the business profit, as long as these expenses are incurred wholly and exclusively in the production of the income from your business.   For example:

  • The cost of materials e.g. wood bought by a carpenter.
  • Employee wages, salaries and other staff costs.
  • Rent, rates, electricity and water costs of business premises.
  • Repairs to and maintenance of business premises.
  • Bank charges and interest on business loans and overdrafts.
  • Bad debts and specific doubtful debts.

Q. What expenses are not allowed as deductions?

A.  Certain expenses are not allowed as deductions. For example:

  • Private expenditure - Your own wages/salary and social insurance contributions.
  • Donations to charities or sponsorships.
  • A general provision against doubtful debts.
  • Fines for breaking the law.
  • Travel expenses between your home and place of business.
For any enquiries please contact us on Tel 200 74874 or email us at selfemployed@gibraltar.gov.gi