As proud supporters of the Armed Forces Covenant, RIFT is always delighted to see improvements in the way UK Service personnel are treated. That doesn't just mean working alongside ABF The Soldiers' Charity, or teaming up with employers to improve the prospects of Service leavers. Working in the tax sector means keeping up to date with every rule and rate change, and understanding how it affects you.

Right now, for example, a government plan's in the offing to make sure MOD employees aren't hit unfairly by differences between Scottish tax law and the tax bands for the rest of the UK. Scotland's tax rates are devolved to Holyrood – meaning they can be different from elsewhere. The differences might seem small, but they're causing about 8,000 military personnel to pay more tax than they would south of the border.

What's the difference in Scottish Tax Bands

Scotland's tax rates are designed to be slightly more “progressive” than the rest of the UK's. There's a lower “starter rate” for people on low incomes, and a 21% intermediate rate for people making between over £24,000. Meanwhile, the Higher and Additional rates are both 1% higher than elsewhere, at 41% and 46%.

The bottom line is that if you earn over £26,000, you're now paying more Income Tax in Scotland. About 70% of Armed Forces personnel posted there are being punished for it with extra tax.

How is the Government ensuring all Service Personnel pay the same tax?

However, this is where the news gets better. The UK government has announced it's going to compensate the thousands of MOD employees hit by this, to make sure they aren't treated unfairly.

Defence Secretary Gavin Williamson says anyone paying more tax than they would if posted outside Scotland will be reimbursed each year. What these payments are worth, of course, will vary from person to person depending on their salary. Estimates have ranged from £117 for a staff sergeant to over £1,000 for a full colonel.

Who qualifies for the Scottish Income Tax MOD rebate?

Any personnel who pay Scottish Income Tax will qualify for the payments, no matter where in the world they're posted. With 70% of its employees in Scotland set to qualify, the MOD guesses it's going to cost about £4 million to cover the current tax year.

Tax rules change often, and it's all too easy to get tangled in them and end up paying too much or landing in hot water. It's great to be able to pass on good news, but remember that the taxman won't necessarily be on your side every time. Whatever tax questions or problems you have, talk to RIFT. We're always working with the latest information, and we've always got your back.

This isn't the only tax rebate you could be due. Use our tax refund calculator to find out if HMRC owe you money for travel expenses when posted or training.