Gibraltar tax for British movers

Ordinary Gibraltar residents elect annually between two parallel systems. The Allowance-Based Scheme uses progressive bands (around 14% to 39%) with a personal allowance, spouse allowance, child allowance, and deductible items including mortgage interest, education costs, medical insurance, and approved pension contributions. It rewards households with significant deductions.

The Gross-Income-Based Scheme applies flat rates (currently 7% to 28% across income bands) with no personal allowance and almost no deductions. It rewards straightforward income with few offsets. The two systems are deliberately designed so different earners benefit from different schemes. The Income Tax Office accepts annual elections, so the choice can change as circumstances change.

For most British movers without children and without significant deductible outgoings, GIBS is simpler and slightly cheaper. For families with mortgages and school fees in approved schools, ABS often wins. The playbook walks through the calculation with worked examples at the £60k, £100k and £200k income levels.

Cat 2 holders are taxed only on the first £118,000 of worldwide income, regardless of total earnings. The combined effect of the ABS calculation on that capped slice, the personal allowance, and the minimum tax floor produces an annual liability between roughly £37,000 and £44,740. Whether you earn £200,000 or £20,000,000, your Gibraltar tax bill stays within that band.

The cap applies to assessable Gibraltar tax only. UK-source income (rental from a UK property, UK government pensions) may still be taxed in the UK at source under the double tax treaty. The treaty's credit mechanism prevents double taxation but does not extend the cap to non-Gibraltar systems.

UK government pensions (Civil Service, NHS, teachers, armed forces, police) remain taxable only in the UK under Article 18 of the UK-Gibraltar DTA, even after you become Gibraltar tax resident. They are excluded from Gibraltar assessment entirely.

The UK State Pension, and private/occupational pensions including SIPP drawdowns, are taxable only in Gibraltar once you are Gibraltar tax resident. The UK no longer taxes them (you can apply for HMRC to stop withholding via the DT-Individual form). For Cat 2 holders, pension income falls inside the £118,000 cap.

Drawdown timing matters in the year of the move. Large lump sums taken before Gibraltar residency triggers stay UK-taxable in full. The same drawdown after the trigger may benefit from Cat 2 capping. The playbook walks through a worked example of a £100,000 pension lump sum and the £30,000+ tax difference between pre- and post-trigger timing.