Finance Bill Tracking Service 2007 | Budget 2007 | Budget Notes

BN48 Armed Forces Operational Allowance

Who is likely to be affected?

1   Members of the armed forces who are paid the new Operational Allowance for service in specified areas, as designated by the Secretary of State for Defence, where the operational demands are the greatest.

General description of the measure

2   Legislation introduced in Finance Bill 2007 removes the tax charge that would otherwise arise where a member of the armed forces is paid the Operational Allowance.

Operative date

3   The legislation will cover all payments of the Operational Allowance for service from 1 April 2006.

Current law and proposed revisions

4   The Secretary of State for Defence announced on 10 October 2006 the introduction of a new Operational Allowance for UK armed forces serving in specified locations, such as Iraq, Afghanistan and the Balkans.

5   Without legislation the allowance would be chargeable to tax.

6   The legislation in Finance Bill 2007 will ensure that there is no tax charge where a member of the armed forces is paid the Operational Allowance.

Further advice

7   If you have any questions about this change, please contact the Employer Helpline on 0845 7143 143. Information about Budget measures is available on the HM Revenue & Customs website at www.hmrc.gov.uk