Tax Relief On Tour/Operational Allowance

had a quick check & found nothing regarding the topic, so here are a couple of links that give the good news for us. shame you cannot back date it a few years then we would all be well in the money BUT anything is better than nothing.

Good news – new bonus for deployed personnel!

The Secretary of State for Defence, Des Browne recently announced the introduction of a new tax-free bonus for soldiers on operations in Iraq, Afghanistan and certain deployments to the Balkans. Details of the eligibility criteria will be announced shortly.

How much is the allowance?
This new tax-free Operational Allowance is currently set at £2,240 for a six month tour. This amount is pitched to ensure that the more junior personnel on operations are compensated for their tax bill whilst deployed. It is based on the tax paid on salary and allowances received on operations by a Private with five years service.

When does the bonus start?
The bonus will be backdated to 1st April 2006 and every effort is being made to ensure personnel eligible for the bonus receive payment as soon as possible.

How much will the bonus cost?
The cost will vary year on year depending upon the nature of the tasks the military undertake. For the current year the cost is likely to be some £60-70m.

Is this new money or will the MOD have to make cuts elsewhere to fund this bonus?
The payment will be made from new money from the Treasury Reserve and thus MOD will not have to make savings to fund the bonus.

Will the bonus impact on tax credit entitlement?
No. The bonus paid this financial year will not reduce tax credits because there is a disregard of rises in income of up to £25,000. For future years, the legislative changes in the Finance Bill 2007 will also have the effect of exempting them from consideration for tax credits.

Why not tax free pay?
An exemption from income tax would have given most benefits to those senior personnel who are paying the top rate of income tax, but would have done very little for those lower ranks who currently pay little tax.

Is the UK the only NATO force that pays income tax whilst deployed on operations?
No. Forces from Denmark, France, Germany, Ireland, Netherlands, New Zealand, Norway and Spain also pay tax on operations. The AFPRB has twice commissioned research into the military remuneration packages offered by NATO and Commonwealth countries. These surveys took into account several factors including different tax regimes.


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