HEPSS Gibraltar in 2026: £39,940 a year on any salary above £160,000
An executive in Gibraltar earning £1 million a year can pay just £39,940 in income tax, about 4% of the salary. That is the point of HEPSS (High Executive Possessing Specialist Skills, often misspelled HEPPS). The law taxes a notional £160,000 of pay, and nothing above that line from the certified post is taxed, whether salary, fees, perks or benefits in kind.
The status comes from the High Executive Possessing Specialist Skills Rules 2008. One detail most summaries miss: the employer applies, not the employee. Under rule 3, a Gibraltar company, or a statutory body approved by the finance minister, asks the Finance Centre Director at Gibraltar Finance, the government's financial-services department, for a certificate naming the person it pays. The finance minister must be satisfied that the tests are met, and the Income Tax Office collects the tax through payroll.
Who qualifies for HEPSS status in 2026
Rule 3(1) sets five tests:
- A senior job. The person will hold "a high executive or senior management position" in Gibraltar.
- Pay above £160,000 a year, earned in Gibraltar.
- Skills Gibraltar lacks. The skills must be unavailable locally, needed for economic activity of particular value to Gibraltar and important to its economic growth.
- Approved housing. The Finance Centre Director must approve a home in Gibraltar that is adequate for the executive and their dependants and reserved for their exclusive use while the certificate runs.
- A clean 36-month gap. The person must not have worked or lived in Gibraltar at any point in the 36 months before the year of application. The finance minister can waive this.
The certificate names the person, the employer and the post. It becomes void if the application was materially false or incomplete, tax goes unpaid, or the holder stops meeting the tests or ceases to be of good character (rule 5).
How HEPSS tax works: the £160,000 slice
Gibraltar has two income tax scales, and the Commissioner of Income Tax charges whichever gives the lower bill: the ABS (Allowance Based System), with personal allowances and a top rate of 39%, and the GIBS (Gross Income Based System), with lower rates on gross income. A HEPSS holder is taxed only under GIBS, and only on £160,000 of certificated pay.
The GIBS bands in rule 3A of the Rates of Tax Rules 1989 show where the figure comes from:
- first £17,000 at 16%: £2,720
- next £8,000 at 19%: £1,520
- next £15,000 at 25%: £3,750
- next £65,000 at 28%: £18,200
- remaining £55,000 at 25%: £13,750
- total: £39,940
Three rules shape the bill:
- Payment is monthly, through payroll: 12 instalments of £3,328.33. In the first and last years every part-month counts as a full month. The tax year runs from 1 July to 30 June.
- A full-year bill never drops below £39,940. Rule 7(5) taxes £160,000 even if actual pay is lower.
- The cap covers the job, not everything. Under rule 8, taxable income from other sources is taxed in full under GIBS, with the £160,000 counted first, so it lands in the 25% top band. According to EY's Gibraltar tax facts, bank interest and dividends on listed shares are not taxed.
Worked example: a £400,000 executive
Take a chief risk officer joining a Gibraltar-licensed insurer on £400,000 a year:
- With HEPSS: £39,940, an effective rate of 10%.
- In Gibraltar without HEPSS: £26,190 on the first £105,000 plus 25% on the other £295,000, a total of £99,940.
- On the same salary in London: £166,203 of UK income tax on 2026/27 rates for England, before National Insurance (UK social security contributions). Above £125,140 the personal allowance is gone, and every further pound is taxed at 45%.
The rule of thumb: GIBS charges a flat 25% above £105,000, so HEPSS saves exactly 25p on every pound of certificated pay above £160,000. That is £5,000 a year at £180,000, £60,000 at £400,000 and £210,000 at £1 million.
Do HEPSS holders need a Gibraltar residence permit?
HEPSS is a tax certificate, not a right to live in Gibraltar. That comes from the Residency Regulations 2026 (Legal Notice 2026/166), in force since 14 July 2026 to implement the UK–EU treaty on Gibraltar. They have no HEPSS route, and Gibraltar law firm Isolas notes that they leave HEPSS untouched. The family still needs a legal basis to live there: in practice, the employee permit. It requires:
- a contract of at least a year paying at least Gibraltar's published average earnings
- a licensed employer that is trading and up to date with its payments and filings
- a purchase, or a lease of at least 12 months, on your main home (holiday lets do not count)
- vetting by the country where you last lived
- an age of 55 or under. The Chief Minister, the head of Gibraltar's government, can waive this and the pay test for people of good character whose skills are important to Gibraltar's economic growth
An employer licensed for less than a year must also lodge a refundable deposit covering the hire's first-year social insurance plus 25% of average earnings. The other rules:
- Validity and fees: one year, renewable without a new age test. The fee is £250 per application and £20 per renewal, for each family member.
- Family: a spouse or civil partner, children under 18 and older children in full-time education. Adults are vetted, and including a spouse requires a deposit equal to the first year's social insurance contributions on the main contract.
- No early move-in: there is no right to live in Gibraltar while the application is pending, and living there without a permit carries a £2,500 penalty.
- Job loss: the permit is revoked automatically 16 weeks after a termination notice is filed, unless a new qualifying contract is in place.
Non-EEA (European Economic Area) nationals and others not entitled to work in Gibraltar also need a work permit, which the employer obtains for a specific post for up to 12 months. Hiring without one can cost the employer a £3,000 fixed penalty. New arrivals have no route to permanent residence (regulation 13 only covers people already certified as permanent residents under the old law), and HEPSS itself leads to no passport.
Is Gibraltar in Schengen?
No. Gibraltar is a British Overseas Territory outside the EU and Schengen. Since the UK–EU treaty began to apply provisionally on 15 July 2026, Schengen border checks happen at Gibraltar's airport (and the port where needed) rather than the land frontier. Schengen states no longer require a short-stay visa from anyone legally resident in Gibraltar. The flip side: if Schengen authorities object to a permit, for example over an alert in the Schengen Information System (the Schengen area's shared alert database), Gibraltar must refuse it (regulation 20).
How to apply for HEPSS: steps and timeline
- The employer builds the case: the post, the pay and why the skills cannot be found locally.
- Vacancy and work permit. Every vacancy must be registered with the Department of Employment at least 10 days before the start date. The start date on the Terms of Engagement (the compulsory notice that registers every new hire) cannot come before any work permit.
- Housing. Buy, or lease for 12 months or more, and get the home approved by the Finance Centre Director.
- HEPSS application. The employer files with the Finance Centre Director and pays a non-refundable £1,264 fee (the rate since 1 August 2026, up from £1,233).
- Residence permits for the executive and each family member.
- Payroll. The Commissioner of Income Tax issues a directive, and the employer deducts £3,328.33 a month.
The Rules set no processing deadline, and housing is often the slowest step. The 36-month look-back runs back from the year of application, so applying in a later year than you start work can disqualify you on your own months in Gibraltar. File in the year you start.
HEPSS vs Category 2, UK FIG, Malta GRP and Cyprus non-dom
HEPSS vs Category 2. Category 2 is Gibraltar's capped-tax status for wealth, not work. Under a policy announced on 18 June 2026, new applicants need net worth above £5 million, up from £2 million, and a holder cannot take a Gibraltar job without the Finance Centre Director's permission. If your wealth is your salary, HEPSS is the only Gibraltar status that caps the tax on it.
The rivals. The UK's FIG exemption, in place since 6 April 2025, does nothing for pay earned in the UK, and Malta's GRP excludes anyone using its executive scheme, the Highly Qualified Persons Rules. Cyprus's executive perk sits outside non-dom status: according to PwC's tax summary, half of employment income is exempt for 17 years if pay exceeds €55,000 and it is a first job in Cyprus after at least 15 consecutive tax years abroad.
HEPSS and Spain: why the certificate is not enough
The 2019 Spain–UK tax agreement on Gibraltar, in force since 4 March 2021, states that HEPSS and Category 2 do not by themselves prove Gibraltar tax residence. The text in Spain's official gazette sets hard rules:
- Spanish nationals who moved to Gibraltar after the signing on 4 March 2019 stay Spanish tax residents in every case.
- When both sides claim you, Spain wins if you spend more than 183 nights a calendar year in Spain, your spouse or dependants live there, your only permanent home is there, or two-thirds of your net assets are there.
- Otherwise, you count as a Gibraltar resident only with a permanent home for your exclusive use in Gibraltar and more than 183 days there.
- Non-Spanish nationals moving from Spain stay Spanish tax residents for the year of the move and the following four, unless they spent less than a full tax year in Spain.
The land border is now easy to cross, but these tests decide where you are taxed. More in our guide to tax residency.
Who HEPSS suits and who it doesn't
It suits senior hires into Gibraltar-licensed insurers, fund managers and gaming operators on pay well above £160,000, and founders who genuinely run a Gibraltar operating company.
It does not suit:
- Spanish nationals, whom Spain keeps as tax residents
- anyone who has lived in Spain for a full tax year or more, because of the four-year tail
- salaries just above £160,000: the saving is £2,500 at £170,000, before fees and Gibraltar housing costs
- investors and retirees, who should look at Category 2 or our non-dom regimes overview
- people over 55, who fail the employee permit's age test unless the Chief Minister waives it
See also Gibraltar tax rates and Gibraltar company formation.
Frequently asked questions
What does HEPSS stand for in Gibraltar?
High Executive Possessing Specialist Skills: a Gibraltar tax status, set out in the 2008 Rules of the same name, that caps income tax on a senior employee's certificated pay at £39,940 a year.
How much tax do you pay under HEPSS?
£39,940 for a full tax year, deducted through payroll as £3,328.33 a month. The job must pay more than £160,000, and the bill is the same on £200,000 (20% effective) or £2 million (2%).
Who applies for HEPSS, the employee or the employer?
The employer: a company incorporated, registered or doing business in Gibraltar, or an approved statutory body. It files with the Finance Centre Director, pays the £1,264 fee and is named on the certificate with the post.
Can my family live in Gibraltar with me on HEPSS?
Yes, through residence permits for a spouse or civil partner, children under 18 and older children in full-time education. Each pays £250, and including a spouse requires a deposit equal to a year's social insurance contributions.
What happens to HEPSS if I lose my job?
The certificate becomes void once you stop meeting its conditions, and a new employer must apply for a new one. Your residence permit is revoked automatically 16 weeks after a termination notice is filed, unless you have a new qualifying contract.
Can I live in Spain and work in Gibraltar under HEPSS?
Not safely. The Rules require an approved Gibraltar home for your exclusive use, and under the Spain–UK tax agreement more than 183 nights a year in Spain, or a family living there, can make you Spanish tax resident.