PCD Group recently hosted an expert webinar with Stuart Dalmedo, Partner at ISOLAS LLP, and Matt Penfold, Director at Fiduciary Wealth Management, covering the real practicalities of relocating to Gibraltar — from residency routes and pensions to property, succession planning, and the mistakes that trip people up.

Demand at Record Levels — and the Government Has Noticed

Interest in Gibraltar residency is, as Dalmedo put it, “through the roof” — so much so that the government was forced to suspend general residency applications in response to surging demand. Two catalysts stand out: the UK’s autumn 2024 budget, which Penfold described as “almost a marketing exercise” for Gibraltar, and the UK–Gibraltar–EU treaty that will give residents quasi-Schengen access to Spain. No capital gains tax, no inheritance tax, no VAT, and free movement into continental Europe is a compelling package. Over 80% of enquiries originate from UK nationals, though the audience is broadening.

The Residency Routes: Category 2 and HEPSS

With general applications suspended, the two principal pathways are Category 2 status and HEPSS. Category 2 is available to individuals with net assets exceeding £2 million, capping worldwide income tax between £37,000 and £42,360 per annum regardless of actual earnings — a dramatic saving against the UK’s 45% top rate. HEPSS applies to senior executives with specialist skills, taxing income only up to £160,000. Dalmedo’s headline advice: secure your residency pathway before any property commitment. Arriving without a confirmed route — an increasingly common mistake — can leave individuals with no options at all.

Financial Planning: Start Early and Think Holistically

Penfold’s first question to any new client is not about tax — it is about goals. Accumulation or drawdown? Estate planning a priority? Possibility of returning to the UK? He draws a clear distinction between financial and lifestyle motivations, and is direct that the move must satisfy both. “I’ve seen people come purely for the tax reasons and it doesn’t work out.” His consistent financial message: “Gibraltar is the solution. The UK is the issue. It’s not a case of just arriving and thinking you’re paying less tax — you need to structure it properly.”

Pensions: A Standout Opportunity

The Qualifying Recognised Overseas Pension Scheme (QROPS) is, in Penfold’s words, “a huge opportunity” for Brits moving to Gibraltar. Pension income under a Gibraltar QROPS is taxed at a flat 2.5% — against 40–45% for many in the UK. The standard 25% tax-free lump sum applies on transfer, rising to 30% after five years of residency. Following 2024 UK budget changes, QROPS transfers now require the individual to live in the same country as the scheme — Gibraltar and Malta are among the very few European jurisdictions where this is possible. The caveat is firm: genuine residency is required. “They have to genuinely want to live here.”

Investments and Tax Wrappers

Gibraltar’s tax generosity renders many UK structures redundant. Offshore bonds — typically used to defer capital gains tax — serve limited purpose where there is no CGT, and a straightforward investment portfolio will usually outperform once bond fees and restrictions are factored in. Exceptions exist for those who may return to the UK, where certain wrappers can smooth the transition back. For those committed to the move, a CGT-free environment simply enhances portfolio growth. On currency, sterling remains the reference point; relocation is, however, a natural moment to review asset allocation and broaden beyond a purely FTSE-centric outlook.

Inheritance Tax and Succession Planning

Gibraltar has no inheritance tax, but Dalmedo was quick to correct a frequent misconception: relocating does not immediately sever UK IHT exposure. Under the post-2025 UK regime, the test has shifted from domicile to residency, with a ten-year window before an individual exits the UK IHT framework entirely. The position during those intervening years requires careful analysis, and UK advice must be secured alongside Gibraltar planning to ensure the overall structure holds up.

Once genuinely outside the UK framework, Gibraltar offers a comprehensive succession planning toolkit. Wills — including testamentary wills that establish a trust on death — can be registered with the Gibraltar Supreme Court, as can Lasting Powers of Attorney covering both financial and healthcare decisions. The right structure always depends on individual objectives: what an individual wants for their family and future generations across the short, medium, and long term. For those retaining transitional UK IHT exposure, Penfold highlighted life insurance as an effective and underused mitigation tool, both against the ten-year window and the seven-year clock on gifts. He also flagged the broader point: existing UK policies should be reviewed on relocation, as they may not carry across properly.

Property and Banking

Property gives many prospective relocators pause. Supply is tight in a 6.8 square kilometre jurisdiction, prices rose sharply during COVID and remain elevated, and the market is predominantly apartments — from the lively Ocean Village marina to the quieter Queensway Quay. Penfold’s advice: visit before committing, rent before buying, and understand that the £1–10 million net worth bracket is Gibraltar’s natural sweet spot. Many purchases are cash transactions, with UK banks unwilling to lend against Gibraltar property. On banking, Penfold was pragmatic — continue with your existing UK account initially, and deprioritise the switch. “I left the UK seven years ago and still use my Barclays account.”

The Closing Message

Both speakers converged on the same theme. Dalmedo: “Residency is granted on paper, but tested in life. Make Gibraltar the genuine centre of your life, or the proposition loses its attraction.” Penfold: “Gibraltar is an incredible opportunity — but it only works if you plan properly. Those who start early are the ones who benefit.” The message for anyone considering the move is consistent: engage specialists on both sides of the equation, begin well in advance, and treat this as the genuine lifestyle commitment it needs to be.

This webinar is available to watch on demand for PCD Group members. For more information about upcoming PCD events and webinars, visit pcdgroup.co.uk