Continued protection from tax hikes for military personnel in Scotland

29 March 2019


Thousands of troops who could have been adversely affected by the Scottish Government’s income tax rises will continue to be protected in the next financial year.


Last year the Defence Secretary announced that to counter tax hikes by the Scottish Government, the MOD would provide financial mitigation to ensure that over 8000 personnel would not be negatively affected.


The move came after concerns that income tax changes could have resulted in Scotland becoming a less attractive place for military personnel to be posted. The renewed protection, to cover financial year 2019/20, will protect nearly two-thirds of all armed forces personnel liable for Scottish Income Tax. It will also help with recruitment and retention, particularly as many of those affected are personnel with specialist skills, such as aircraft and submarine engineers.


The last Scottish Government budget in December 2018 confirmed further divergence between Scottish and UK tax rates and as a result, the financial compensation cap for Armed Forces personnel liable for Scottish tax has risen from £1500 to £2200.


The plans will protect the personnel who continue to 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 receive similar take-home pay.