Finance Bill Tracking Service 2007 | Budget 2007 | Budget Notes

BN49 Tax treatment of payments under Armed Forces Redundancy Scheme 2006

Who is likely to be affected?

1   Recipients of payments under the Armed Forces Redundancy Scheme 2006.

General description of the measure

2   Legislation is being introduced in Finance Bill 2007 to ensure that payments under the 2006 scheme will be tax-free in the same way as payments under the 1975 Armed Forces Redundancy Scheme.

Operative date

3   The legislation will apply to any payments under the 2006 scheme from its commencement on 6 April 2006.

Current law and proposed revisions

4   Current legislation provides tax-exemption for payments made under the Armed Forces Redundancy Scheme 1975.

5   An amendment to the Income Tax (Earnings and Pensions) Act 2003 is needed to replicate the tax-exemption applicable to payments under the 1975 scheme in relation to payments under the 2006 scheme.

Further advice

6   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