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Armed forces tax rebate: Everything you need to know - The PAYE People

October 19, 2021by The PAYE People

When it comes to filing your taxes, it’s very important to know what you’re owed as a member of the armed forces. Considering that military personnel and family members receive unique benefits and tax breaks as a result of their service-based income and occupation, you might miss out on great rebate opportunities if you are not informed.

In the UK, the armed forces tax rebate is a special reduction in taxation for all members of the armed forces, regardless of being full-time or part-time. You may be able to claim this rebate if you’ve served in the armed forces for a certain amount of time. However, you must have a tax code. To qualify for a service tax code, you need to provide a certificate from an officer or an RCAF or RAF that vouches for your service.

Do armed forces really qualify for tax rebate claims?

Yes. Armed forces are eligible for tax rebate claims in the UK. Claiming an armed forces rebate can help you save up to £1,000 a year. Armed forces, including the British Army, Royal Air Force and Royal Navy, can claim a tax rebate. Much like other tax rebates, this one is only available if you have paid the right tax from your wage at work. If you have been out of work for a period of time, you may also be entitled to rebates. You just need to look for opportunities from your deductions and payments and you’ll find situations to claim some money from the government.

The exterior of a Royal Air Force building with a sign outside to show armed forces careers.

What does the MOD say about armed forces claiming rebates?

The Ministry of Defence (MOD) says armed forces personnel can claim tax rebates for all time spent deployed overseas. If you are deployed on active duty overseas for more than 183 days each year, your service will be considered full-time.

The MOD allows armed forces personnel to claim tax rebates for travel, accommodation, service pay and ancillary costs associated with the discharge of their military duties. You can also claim tax rebates for any clothing costs. That’s if your employer requires you to wear different clothes to work among other things.

The exterior of the Ministry of Defence building on a sunny day with a clear sky.

What documents are needed from armed forces personnel?

Before applying for a tax rebate, you need to gather all the information you need. Armed forces personnel who meet the eligibility requirements can apply for a rebate for tax they’ve paid with the right documents in hand. To qualify, you must have served in the military for longer than six months. And the rebate only applies to the past two tax years, so you’ll need information from the past 24 months. Some documents you might need to have handy while applying for a rebate include:

  • Bring either a photo ID, driving licence or passport
  • Proof of address like a utility bill or bank statement
  • Wage slips for the period you’re claiming for
  • MOT certificates for each vehicle you owned during this period
  • P60 End of Year Certificates, if any
  • P45’s for the period you are claiming for if any
  • Mess Dress receipts
  • Additional supporting documents, if you’ve got any other money coming in

I’m owed from previous years, can I still get tax refunds?

The tax rebates are not a gift you get from the government. They are actually your money by law and should be given to you when you demand it. You can claim armed forces tax rebates from several years back but not more than four years back. The length of time that you’ve been away from the UK heavily impacts your rights to get armed forces tax refunds.

The last date you can send your paper tax return to HMRC is 31 October. You can either hand your form to your local post office or ask HMRC to collect it for you. Any tax returns that are sent in after that date won’t be completed. If you are filing your tax rebates online, ensure you do so before 31st January. We encourage you to complete your tax return online.

If you don’t send your completed tax return to HMRC by the required dates, there’s a penalty. You’ll have to part with a fee of £100.

A black and white background with a military uniform with the Union Jack flag on the shoulder of the arm.

I’m about to be deployed, what do I need to do to get my tax rebates?

It’s a good idea to know what you’ll be entitled to before you’re deployed. This will make it easier to lay down a plan. It’s important to say as well to work out how your entitlements will change. Understanding your eligibility for the rebate is a good place to start. Part of that includes making sure that you’ve claimed all the tax rebates that you are owed before you leave.

But then again, It’s a common misconception that armed forces personnel can’t claim a tax rebate when they’re on a mission outside the UK. That isn’t how things work. You can still claim your taxes while outside the country on active missions. You can use the rebate money outside the country or as you would when in the country.

What costs can I claim armed forces tax for?

If you are deployed, have served overseas or are in transit in a hostile zone, you may be able to claim tax relief for some of the costs of living overseas. Costs you may be able to claim in your UK self-assessment tax return may include:

  • If you have been using public transport or your personal vehicle for the service
  • Claim for mess dress where they apply
  • Using your own mobile phone for service when on your travels
  • Home improvement for what you spent to make your place look good
  • Security services for your place or any other as agreed

How fast can I get my tax rebates money?

For armed forces tax rebates, the only thing you will need to claim when you become a member of the armed forces is to have served at least 180 days of continuous service. If that is your case, then you need to submit your forms for the year following the year in which you want to get them.

You can also apply for a non-cash payment through your bank to make sure the process is as quick as possible. Make sure you have an up-to-date government account to do this. Whether you apply for an online payment or a non-cash payment, you’ll need your unique reference number.

HMRC takes an average of 6 to 8 weeks to process a claim form. It also takes a similar amount of time for them to payout. It is possible that your claim may not be processed as quickly as you may wish. If you have a deadline, it may be worth getting in contact with them to check if they need any extra information from you.

A summary on claiming armed forces tax rebates

Claiming armed forces tax rebates is a great way to get a refund on your tax return. If you served in the military and were stationed in a combat zone in a country where you were in a foreign region, you may be eligible for certain tax bonuses. There are different rules, depending on if you were in the military or in the National Guard or Reserves, but armed forces tax rebates are something you should know about. If you have any questions or concerns about your armed forces tax rebates, reach out to PAYE People so we can help you.

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