Thousands of troops set to be left out of pocket by tax rises recently announced by the Scottish Government will be protected by plans unveiled by Defence Secretary Gavin Williamson…

The plans will protect around 8,000 personnel who would otherwise be negatively affected by the income tax hikes. Personnel will be compensated with an annual payment to make sure that all troops, regardless of where they are deployed or where their families are based, will pay the same income tax.

Following the announcement of Scottish Government’s tax changes, in March Mr Williamson ordered work to start on how the Ministry of Defence would mitigate the impact, following concerns that the changes could result in Scotland becoming a less attractive place for military personnel to be posted to.

The measures will protect nearly three quarters of all armed forces personnel liable for Scottish Income Tax and will help with recruitment and retention, particularly as many of those affected are personnel with specialist skills, such as aircraft and submarine engineers.

Defence Secretary Gavin Williamson said: “It is completely wrong for the brave men and women of our Armed Forces to be punished for serving in Scotland by unfair raids on their pay packets by the Scottish Government. That’s why we have taken this urgent action to ensure that our troops are treated equally and fairly.”

The financial mitigation measures will:

  • Be payable to all regular personnel who pay Scottish Income Tax, regardless of where in the world they are serving. Mitigation payments of between £12 and £1,500 will be paid
  • Cover personnel for tax year 2018/19 and will be a single payment made retrospectively
  • The case for financial mitigation will be reviewed annually

The MOD will continue to review the situation each year and make decisions each tax year as to whether the difference between Scottish tax and tax elsewhere in the UK is sufficient to warrant financial mitigation. The annual cost to the MOD for Tax Year 2018/19 is expected to be £4 million.

Minister for Defence People and Veterans Tobias Ellwood said: “Scotland, and military personnel who have made Scotland their home, play a key role in our nation’s defence. Whether it’s working on our nuclear deterrent, protecting NATO airspace, or building local security expertise in the Middle East, Scotland-based troops are engaged right now in protecting the UK and its allies.”