7,000 Armed Forces troops to receive £2,200 tax refund
Around 7,000 Armed Forces personnel are to receive a tax refund of more than £2,000. The UK Government is has announced to extend provision of financial mitigation for servicemen and women having to pay higher rates of income tax in Scotland, it has been announced. A divergence in rates means that income tax higher earners in Scotland pay more than they do in the rest of the UK.
Speaking at Prime Minister’s Questions on Wednesday, Theresa May said that around 7,000 military personnel in Scotland would receive compensation to ensure that all soldiers pay the same across the UK. HMNB Clyde in Faslane is the home of core of the Royal Navy’s Submarine Service, and 45 Commando Royal Marines are based at RM Condor in Arbroath. It means that servicemen and women could be liable to receive around £2,200 in a single annual payment, made in 2020, in order to offset the difference over the 2019/2020 financial year.
In July last year, the UK Government announced it would provide financial mitigation for troops after changes to tax rates were first introduced at Holyrood. Defence Secretary Gavin 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.”
Secretary of State for Scotland David Mundell described the tax bands set out by the Scottish Government as “unfair”. He said: “Our servicemen and women make a huge contribution to Scottish communities and the economy and it is unfair for them to be hit in the pocket by the Scottish Government’s decision to make Scotland the highest taxed part of the UK. “I welcome the Defence Secretary’s confirmation that the UK Government will continue to protect our military personnel from this Scottish Government imposed penalty.”
Scottish Government Finance Secretary Derek Mackay said: “As a result of the Scottish Government’s progressive tax system most Scottish income taxpayers – including thousands of armed forces personnel – will pay less income tax than people earning the same and living in the rest of the UK. “We are fully committed to supporting the armed forces community. “Scotland continues to be an attractive place to live, work and do business with armed forces families in Scotland able to access many services and benefits not available elsewhere in the UK. “It is disappointing that, despite Scottish Ministers making an offer last year to discuss the differential taxation of military personnel, the MoD has continued to fail to consult the Scottish Government on this issue.”