04-04-2019

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

Last year the defence secretary Gavin Williamson announced that to counter tax rises by Holyrood, the MOD would provide financial mitigation to ensure that over 8,000 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.

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 £1,500 to £2,200.

The plans will protect the personnel who continue to be negatively affected by the income tax rises. 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.

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 of between £12 and £2,200 will be paid, with payments grossed up to take account of income tax and national insurance applied when they are made.

*Cover personnel for tax year 2019-20, with a single payment made retrospectively.

The MOD will continue to review the situation 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 2019-20 is expected to be £6 million.

Williamson said: Williamson said: "Our armed forces are deployed where they are most needed and so it is wrong that personnel are penalised or left hundreds of pounds out of pocket because of decisions taken by the Scottish government.

"As a result of this decision, I am extending the financial mitigation package for serving personnel in Scotland for another tax year. This demonstrates our commitment to treating all personnel both equally and fairly, wherever they serve."


"I have attended many of The Learn Centre’s training courses in recent years. They are always of the highest professional standard and deliver updates on complicated HR and Payroll legislation, but in an easy to understand format. I would gladly recommend The Learn Centre to any potential client who is looking for HR & Payroll training courses, bespoke in-house training or expert advice."

Michael Stevenson
Payroll Manager at Queen's University Belfast

View on Linkedin

Have a question?

Leave us your details or call us on 01798 861111

Ensure you're up to date and compliant

Are you happy for us to email you from time to time with payroll related information, legislation and updates?

Yes please, keep me up to date