News
It’s Budget Week!
With a return to surplus and no major tax hikes, the CM has presented a Budget that he says is focused on long-term stability. But Treaty-linked changes and rising wage costs mean businesses should stay alert.
Key Takeaways
- Surplus returns: £1.9m in 2023/24; £9.78m projected for 2024/25
- No tax rises: Corporate and personal tax rates remain unchanged
- Minimum wage: Rises from £8.90 to £9.50/hour
- Public sector pay: Up to 5% increase, weighted toward lower earners
- Debt and GDP: Net public debt at £660m (21% of GDP); GDP forecast to grow by 6.5% to £3.1bn
- Social insurance: Contribution caps rise by 5%, effective immediately
- Utilities: Prices remain frozen for businesses and households
Business-Focused Measures
Transaction Tax: Phased Introduction
The proposed Transaction Tax is set to replace VAT-style charges. It will roll out in three phases:
- 15% in Year 1
- 16% in Year 2
- 17% in Year 3
Exemptions and reduced rates include:
- 0% rate: Food, water, books, electricity, medical goods
- 5% rate: Children’s clothes, antiques, bicycles
- Full exemptions: Goods not sold locally, ship/aircraft supplies
- VAT refunds: Continue for wholesale; end for tourists
Electricity will remain 0% rated, helping to contain business costs.
Customs and Tariffs Reform
A full overhaul of Gibraltar’s Imports and Exports Act is on the way to align with EU norms. These changes will be made locally, not dictated by the Treaty.
Business Support
- A new Business Transition Advisory Group, chaired by Minister Gemma Arias-Vasquez, will advise on the implementation of the transaction tax and other Treaty-related impacts.
- Targeted business rate relief is also in development for firms most affected.
Other Budget Updates
- Public service fees: Increase by 3% from 1 August
- Pensions: Occupational pensions rise 2%, state pensions and disability benefits by 3%
- Brexit contingency fund: £10m reserved to manage Treaty-related infrastructure and logistics
Immigration and Residency Reform
A new working group will review residency for third-country nationals.
- Category 2 status: Remains unchanged
- Stricter criteria: Expected for new applicants
- Committee: Will include Ministers, the Attorney General, and experts
- Timeline: Report expected by November
What This Means for Business
- Costs will likely rise: Wage increases, social insurance hikes, and transaction tax will add pressure
- Stability helps: No new tax burdens this year, utilities price-freeze offers relief
- Engage early: Understand the Transaction Tax impact on your sector
What’s Next?
The GFSB will continue to track these developments, share updates, and support members as more detail emerges on the Transaction Tax and rate reliefs.
What’s your take on the Budget? Join the discussion on the GFSB Glue Up community page.
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