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PAYE

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PAYE

QUESTIONS

Q. I’m commencing employment in Gibraltar, how do I register as an employee?
Q. How do I know which of the two tax systems is more beneficial for me?
Q. What allowances am I eligible for? How do I claim them?
Q. I’ve bought a property in Gibraltar, how can I claim for the relevant allowances?
Q. Do I need to complete a Tax Return?
Q. What do I have to do if I’m leaving Gibraltar?
Q. What is a Benefit-in-Kind (B-i-K) and how does it affect my tax position?
Q. Can my employer opt to pay the tax due on my Benefit-in-Kind on my behalf?
Q. My employer pays part of my pension contributions. Is this a Benefit-inKind?
 

APPLICATION FORMS

FORM IT1P - TAX RETURNS

TAX CALCULATORS

QUESTIONS & ANSWERS

Q. I’m commencing employment in Gibraltar, what documents are required in order to register as an employee?

A.

  • If you have not had previous employment in Gibraltar - You are required to submit a copy of your Terms of Engagement contract and proof of Identification.
  • If you have had previous employment in Gibraltar - You are required to submit a copy of your Terms of Engagement contract, proof of Identification and Part 1 of your P7A (Details of employee leaving work) form from your previous employer.

On receipt of the above documentation a tax code will be issued, which will enable your employer to deduct the correct tax and social insurance from your wages.

In the absence of a tax code, your employer is obliged to deduct 20% tax from your wages.

Q. Of the two tax systems, how do I know which is more beneficial for me?

A.

  • The Allowances Based System (ABS) of taxation enables individuals to claim allowances against their gross income, and pay tax on their net income.
  • The alternative Gross Income Based System (GIBS) of taxation, requires you to pay tax on your gross income at a lower rate than under the ABS.     

It is important to note that allowances and rates may vary depending on the tax year.

You can check the amount of tax you would pay under each system by using our online Income Tax Calculator.

Q. What allowances am I eligible for? How do I claim them?

Allowance Type Amount 2017/18 Who is eligible to claim? Document(s) required in order to claim this allowance
AGE ALLOWANCE  £8,900         maximum top-up for unmarried  individuals    £5,600     maximum top-up for married individuals Any individual of state-pensionable age who is in receipt of taxable income. Original or certified copy of ID card, passport, or birth certificate.
APPRENTICE £380 Any individual who is contracted on an apprenticeship basis. Original or certified copy of contract duly approved by the Industrial Training Board, the Gibraltar Official Employers Apprentices Board or equivalent.
BLIND PERSON £5,155 Any blind individual, or his/her spouse. Confirmation from a qualified medical practioner confirming that the individual is blind.
CHILD  £1,135 Any parent in respect of one unmarried child who is either aged 16 or under or is in full-time education.  Can be claimed by one parent only. Original or certified copy of child's birth certificate.
CHILD STUDYING ABROAD £1,290 Any parent in respect of each child over the age of 16 in full-time education abroad.  Can be claimed by one parent only. Proof of educational grant received from the Government's Education Department or proof of enrolment in a University or other educational institution abroad.
DEPENDENT RELATIVE (NON-RESIDENT) £210 Any individual caring for a non-resident dependent relative. Life certificate and proof of income in respect of the dependent and proof that he/she is being maintained by the taxpayer, said proof to be issued in the dependent's country of residence.
DEPENDENT RELATIVE (RESIDENT) £315 Any individual caring for a resident dependent relative. Dependent relative's Life certificate and proof of income.
DISABLED INDIVIDUAL  £9,285 Any parent of an unmarried disabled individual who resides with him/her. Confirmation of entitlement from the Department of Social Security.
GENERAL TAX CREDIT  £300 or 2% of tax liability Any individual who is taxed on the Allowances Based System. Applied automatically at assessment time.  No documentation required.
HOUSE PURCHASE  £12,000 Any legal owner of residential property in Gibraltar which is intended to be used as his/her own main residence. Original or certified copy of title document.
         HOUSE PURCHASE           (SPECIAL DEDUCTION) £4,000  Restricted to £1,000pa All legal owners of residential property in Gibraltar which is intended to be used as his/her own main residence.  Parents who purchase a property for their child/children are not eligible. Original or certified copy of title document(s).
LOW INCOME EARNER £500 upto a maximum of £6,962 Any individual earning less than £19,500pa. Proof of income earned in the previous year.
MEDICAL  £5,155            maximum Any insured individual. Original or certified copy of health insurance policy document.
MINIMUM ALLOWANCE £4,188  maximum top-up Any individual in receipt of taxable income with tax allowances of less than £4,088. Applied automatically.  No documentation required.
NURSERY SCHOOL  £5,160 Any parent in respect of any child(ren) up to pre-school age who is/are enrolled in a private nursery for a full school year.  Can be claimed by one parent only. a)  Letter from the nursery stating the name of the child(ren), date(s) of birth and date(s) during which the child(ren) has/have been attending the nursery; or  b)  Original or certified copies of invoices from the nursery for the period(s) claimed.
PERSONAL £3,300 Any individual in receipt of taxable income. Applied automatically.  No documentation required.
SINGLE PARENT FAMILY £5,435 Any unmarried, separated or divorced parent in respect of any one child.  Original or certified copy of child's birth certificate.
SOCIAL INSURANCE (EMPLOYEE) £335 Any employee paying social insurance contributions. Applied automatically.  No documentation required.
SOCIAL INSURANCE (SELF EMPLOYED) £432 Any self-employed individual paying social insurance contributions. Applied automatically.  No documentation required.
SPOUSE/CIVIL PARTNER £3,300 Can only be claimed by one spouse/Civil Partner . Original or certified copy of marriage/Civl Partner certificate .
TAX CREDIT - INDIVIDUALS AGED 60+  IN EMPLOYMENT WHO ARE NOT IN RECEIPT OF AN OCCUPATIONAL PENSION  £4,000 Any individual over the age of 60 who continues to be in employment and who is not in receipt of an occupational pension. Completed application form.

 

Q. I’ve bought a property in Gibraltar, how can I claim for the relevant allowances?

A. If you have just bought your first property in Gibraltar, you are entitled to claim for the following allowances:

  • Mortgage Interest Allowance: You may claim the amount of interest paid by you on your mortgage or loan in each tax year.
  • Home Purchase Allowance: You may claim an allowance of £12,000 per person, per property. This can be claimed in full in a single tax year, or split over various years.
  • Home Purchase Allowance (Special Deduction): You may claim an allowance of £4,000 capped at a maximum of £1,000 a year.

In order to claim for the above, you will need to complete an application for Mortgage Interest and House Purchase Allowance form and submit a copy of the property deeds, together with your mortgage facility letter.

Mortgage interest letters provided by your lender must be submitted on a yearly basis.

Q. Do I need to complete a Tax Return?

A. You must to submit a Tax Return (IT1P) by 30th November every year. 

Q. What do I have to do if I’m leaving Gibraltar?

A. If you are leaving Gibraltar permanently or indefinitely, please complete the Claim for final assessment form and submit this to the Income Tax Office together with Part 1 the P7A (Details of employee leaving work) from your last employer.

Claim for Final Assessment

Q. What is a Benefit-in-Kind (B-i-K) and how does it affect my tax position?

A.  A Benefit in Kind is something provided to an employee by his/her employer at no cost to the former, which either has, or is capable of having, a monetary value.  This value will be included as part of your taxable income at assessment time, and could increase your tax liability. However the first £250 worths of benefits will be tax exempt. Taxpayers on the Allowance Based System can opt to have their tax code adjusted by the value of the B-i-K received. Alternatively, you can opt to add the value of any B-i-K received to your declared salary or wages. This will result in the benefit being taxed at source.

Q. Can my employer opt to pay the tax due on my Benefit-in-Kind on my behalf?

A.  Yes. Your employer can opt to pay the tax due on any benefits provided by him/her on behalf of his/her employees.

Q. My employers pays part of my pension contributions. Is this a Benefit-in-Kind?

A.  

  • Contributions by your employer to an approved occupational or personal pension scheme are not considered to be benefits-in-kind and are, therefore not taxable; 
  • Contributions by your employer to a retirement annuity contract are considered to be benefits-in-kind and are, therefore, liable to tax.

For any enquiries please contact us on Tel 200 74924 or email us at paye@gibraltar.gov.gi