The Scottish parliament’s had the power to set its own rates and bands for Income Tax since the 6th of April 2017. As a result, those rates and bands have started drifting gradually away from the rest of the UK’s. For the new tax year of 2019/20, for instance, the numbers look like this:

  • Personal Allowance (up to £12,500): 0%
  • Starter rate (£12,500-£14,549): 19%
  • Basic rate (£14,549-£24,944): 20%
  • Intermediate rate (£24,944-£43,430): 21%
  • Higher rate (£43,431-£150,000): 41%
  • Top rate (over £150,000): 46%

When Armed Forces personnel are considered Scottish taxpayers, they’ll generally find themselves paying the Scottish rates on their income. As for who that actually covers, it mostly comes down to where your official “place of residence” is. There are special rules about this for MOD personnel, but it’s usually as simple as where you spend most of your time.

For Scottish taxpayer in the Armed Forces, additional rules were brought in last year to make sure they paid no more than other UK personnel.  It was recently announced that this “financial mitigation package” would apply again this year. According to government figures, about 7,000 military personnel in Scotland will be eligible for compensation to level the playing field. For the 2019/20 tax year, depending on your circumstances, you could qualify for a payment of anywhere between £12 and £2,200.

Keep in mind that this payment is entirely separate from any tax refunds you might be owed. Don’t be fooled into thinking that you can’t make your yearly claim, just because you qualify for Scottish tax compensation.

Of course, all of this relies on HMRC getting accurate information about where you’re based throughout the year. While the MOD’s responsible for reporting certain allowances, benefits and expenses for you, it’s still your job to report any changes to your place of residence. Getting this wrong can mean paying the wrong amount of tax - plus, HMRC will go on the attack if they think you’re doing it deliberately.

The good news is, as always, RIFT has you covered. No matter where you’re posted, we’ll make sure your details are up to date so you never pay more than you owe.

Call or email to take the guesswork out of MOD tax refunds. We’re the UK’s leading tax experts, and that means we’re always right on the money.