Through his annual budget address in Parliament, the Chief Minister announced tax changes that were to take effect from 1st July 2023.
An EasyPay update incorporating the announced changes was released within three days of the announcement. Generally, there was approximately a 1% reduction in tax for those earning under £100k.
On Monday, 24th July, the Gibraltar Tax Office published the official revision of the tax tables. It announced other minor tax measures and minor tax changes previously not detailed in the address. EasyPay was updated within the week to incorporate these additional tax changes.
For this reason, if EasyPay users updated EasyPay regularly throughout this period, some eagle-eyed employers would have noticed that some employees’ taxes were reduced slightly in July and changed slightly again in August. This is to be expected. The net effect of these changes should mean that the employee will be closer to their actual annual tax liability than if they had not applied any tax change in July.
We have received over 80 enquiries about the tax changes in the last two months. Many EasyPay users have queried and compared the new calculations with their own manual calculations. The tax calculation rules are convoluted and more complex than straightforward percentage-based calculations. If any person wishes to query the amount of tax calculated in their pay, they should refer to the official tax tables published online.
Tax Free Bonuses in September 2023
The Annual Budget address this year detailed a new tax-free lump sum to be paid by the Government to public sector workers in September 2023. The payment will be as follows: £1,200 (if earning below £50k); £900 (salary between £50k and £75k) and £600 (salary between £75k and £100k).
The Government also indicated that Employers in the private sector could elect to make tax-free payments on the same terms. However, the lump sum payroll must be made outside of payroll and not appear on any payslips.
To be honest, we’re not sure if many Employers will be able to take advantage of this unique one-time tax-free lump sum. If, as an employer, you had planned to make bonus payments in September, this new measure has probably arrived at the right time.