Managing your money in the UK might feel like a challenge enough. 1 in 6 adults in the UK have zero savings at all. More than 11 million Brits say they have less than £1,000 in savings.
Essentially, money can be tricky to manage, and moving to Gibraltar doesn’t make it easier. You must understand a new system and understand what money you need to pay and when.
Still, compared to some financial systems, it’s not as difficult to manage, and it’s comparable to the UK financial system.
Read on for the ultimate guide to managing your money in Gibraltar.
How Does The Gibraltar Financial System Work?
While Gibraltar has its own financial system, it’s incredibly similar to the UK’s. The Gibraltar Pound (GIP) is the currency, and it has a 1:1 peg with the British Pound (GBP), meaning that GIP is used interchangeably with GBP. It’s best to have both currencies or just GIP if you’re living here.
As for the banks, they are controlled by the GFSC (Gibraltar Financial Services Commission), which ensures that the banking system is operating correctly. Residents are protected under UK law, which guarantees account security and stability. Thanks to its low tax rates, Gibraltar is also considered a tax haven. Well, anywhere feels like a tax haven when you’re from the UK.
Gibraltar International Bank and Trusted Novus Bank are some of the local banks that residents can access. Most UK banks tend to avoid opening branches in Gibraltar.
How to Set Up a Bank Account
Opening a bank account in Gibraltar is straightforward.
Documents you’ll need include an identity document like your passport and proof of residency. If you have recently relocated, some banks accept rental agreements or an employment letter as proof of your address.
To prevent fraud, banks will usually do a background check. For people who reside in the UK, their credit history is often checked. Some banks also request a reference from your old bank.
To open an account, visit the branch or start the application online. Some banks require an in-person visit for document verification. When the account is ready, you can use online banking, receive a debit card, and use local payment methods like you would in the UK.
Banks offer cross-border banking services to expatriates living in Spain but working in Gibraltar. Some banks issue international banking offers, allowing you to have accounts in multiple currencies.
So many people now use options like Wise or Revolut – two completely online services.
How to Pay Tax
Knowing how much you owe is essential.
Gibraltar taxes are more favourable than UK taxes – business owners and professionals love it. There is no capital gains tax, inheritance tax, or VAT, and this region is free of international tax.
If you live in Spain and work in Gibraltar, your tax position becomes more complex. You may need to pay income tax in Gibraltar and declare the earnings in Spain. Agreements on double taxation make sure you won’t pay tax two times.
Income tax comes with levels in Gibraltar. You have a choice of either allowance. You choose an allowance or start in the gross income-based system where the flat rate is lower. Consider which would work best for you based on your earnings and personal situation. If you’re from the UK, Gibraltar Residency can help you understand the Gibraltar tax system.
Just like in the UK, employers pay salaries under the Pay As You Earn system, which means tax is deducted from the pay. If self-employed, annual tax returns are compulsory and so is the payment of social security fees.
How to Save Money in Gibraltar
Food expenses, heating, and electricity are the obvious expenses. You’ll find gas, electricity, and water is cheaper than in the UK. Shopping at local markets can be beneficial with their discount schemes. If you are a frequent visitor to the UK, many supermarkets in Gibraltar accept UK loyalty cards.
If you are a non-resident, public transport comes at a fee, but for residents, it is free. If you drive, petrol in Gibraltar is cheaper than in the UK.
Consider looking into Gibraltar’s investment opportunities and pension schemes for long-term savings. Transferring some UK-based pension plans into Gibraltar is possible, but be cautious of the tax trouble when transferring pensions.
Managing finances anywhere seems difficult. We would say it’s easier in Gibraltar than in the UK because the cost of living is slightly more favourable!