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Individual Tax Return Guide

REMEMBER, REMEMBER THE 30TH NOVEMBER!

After the spectacle and sparkle of Guy Fawkes, another date worthy of illumination is 30th November 2018 because this is the annual filing and payment deadline for Gibraltar individual tax returns!

The responsibility is on all individual taxpayers to submit annual tax returns of their Gibraltar assessable income for the tax year, which runs from 1st July to 30th June. Therefore for 2018 tax returns, income earned in the year ended 30th June 2018 needs to be reported.

All individuals in receipt of assessable income are required to file a tax return. For employees this remains the case even if all their tax is paid through the PAYE system. This is a change for employees who may have previously worked in the UK, where many employees are not required to file UK tax returns if they pay all their tax through PAYE and have no other income.

This filing responsibility applies regardless of country of residency. The key determining factor is whether there is any ‘assessable income’. For all individuals this includes Gibraltar source assessable income (e.g. Gibraltar employment income or Gibraltar rental profits). Therefore frontier workers and overseas landlords of Gibraltar rental property are required to file a tax return and this income may also need to be reported in their country of residency. For those resident in Gibraltar, assessable income is extended to include certain types of foreign income (e.g. overseas employment) and this income may also need to be reported in the source country.

TYPES OF GIBRALTAR TAX RETURN

There are different types of tax returns for individuals (all to be filed by 30th November). These include:

  • IT1P completed by employees and High Executives Possessing Specialist Skills (HEPSS).
  • IT1S completed by self employed individuals. This includes landlords of Gibraltar rental property (where they do not have other income liable to PAYE).
  • IT1C to be completed by Category 2 residents. This is a residency regime for High Net Worth Individuals.

If a tax return has not been received in the post it can be downloaded from the Government’s website.
https://www.gibraltar.gov.gi/new/downloads-ito

PERSONAL INCOME TAX SYSTEMS

The tax return provides the basis for claiming allowances and deductions.

Taxpayers opt to be taxed under the Gross Income Based System (GIBS) or the Allowance Based System (ABS). Spouses may elect either system but restrictions apply to allowances and deductions where one spouse elects GIBS and the other ABS. HEPSS residents are taxed under GIBS. Category 2 residents are taxed under ABS.

TAX PAYMENTS

Gibraltar operates a payment on account system (POA). POAs are based on a taxpayer’s tax liability for the previous tax year. Two POAs are due to be made each year. The first by 31st January and the second by 30th June, with any balancing payment (if required) by 30th November.

For employees who pay all their tax through the PAYE system, POAs will not apply. If there has been any underpayment of PAYE, a balancing payment will be required.

Payment can be made in person at the Income Tax Office. Cheques must be made payable to the ‘Government General Account’. Payment by bank transfer is the preferred option for many.

LATE FILING AND LATE PAYMENT OF TAX

A late filing penalty of £50 is imposed for a tax return reaching the Income Tax Office after the deadline date. Further penalties are imposed of £300/£500 if the tax return is still not filed within 3 months/ 6 months.

A late payment surcharge of 10% of the unpaid tax is imposed on the day following the payment due date. A further 20% surcharge is imposed if the tax and surcharge is not paid within 90 days from the due date.

Other penalties can apply. For example, for fraudulently, recklessly or negligently delivering an incorrect return.

TAX INFORMATION EXCHANGE

With increasing global measures for tax information exchange (e.g. Common Reporting Standard) and UK measures requiring taxpayers to correct historic offshore tax non-compliance (i.e. UK’s Requirement to Correct) now is certainly the time to ensure that tax reporting is correct and up to date in the taxpayer’s country of residency and source country of the income (if different).

Choose the guide to view more information

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