Tax credits for people in the armed forces

Updated on 14 May 2018

You can find basic information about tax credits, how to claim and dealing with your claim in our main Tax Credits section on this website. In this section we concentrate on tax credit matters of interest to people in the armed forces.

What is working tax credit and child tax credit?

There are two tax credits – child tax credit and working tax credit. You can claim one or both of them, depending on your household circumstances. HM Revenue & Customs (HMRC) deals with claims for tax credits.

  • Working tax credit (or WTC) is paid to people who work and are on a low income – it does not matter whether you are an employee or self-employed. You do not need to have children to get WTC.
  • Child tax credit (or CTC) is paid to people who have children. It is paid in addition to child benefit and you do not have to be working to get it.

There are different qualifying conditions for working tax credit and child tax credit, but you only use one claim form. See our ‘how do I claim tax credits?’ section for more information about claiming.

Tax credits are gradually being replaced by universal credit. In postcode areas where the full Universal Credit service is available, most people will no longer be able to make a new claim for tax credits. 

Can I claim tax credits if I am posted overseas?’

One of the basic conditions to be able to claim tax credits is that you must ‘be in the UK’.

As a member of the UK armed forces, you are classed as a Crown Servant. For tax credits, the residence rules are different for Crown servants, and their partners, who are posted overseas.

Crown Servants posted overseas are treated as being in the UK for tax credits provided:

  • You are, or were immediately prior to the posting ordinarily resident in the UK; or
  • You were present in the UK, immediately prior to the posting, in connection with that posting.

In most cases, your partner will also be treated as if they are in the UK for tax credits if they are either present in the UK or accompanying you on your posting. This applies even if you are deployed to an operational area from your overseas posting. Providing your partner stays in the country where the overseas base is situated they will continue to be treated as ‘in the UK’.

There are rules which allow you to be temporarily absent from the UK so that if you go abroad for a short period which you expect to be for less than 52 weeks, then you are treated as being in the UK for up to 8 weeks of that period (this is extended for up to 12 weeks, if the absence is connected to the death, ill-health or treatment for yourself or a close relative). As a Crown Servant, you (and your partner) can be away from the country you are posted to under the same temporary absence rules.

Should I make a joint or single claim?

If you are married or in a civil partnership, then both you and your partner must claim together in a joint claim, even if you are temporarily living apart. You must also make a joint claim if you are living with someone as if you were married or civil partners. You are jointly responsible for the claim.

If you do not have a partner or spouse and are not living with someone as if you are married or in a civil partnership, then you can make a single claim.

If you are married or in a civil partnership, you can only make a single claim if you are separated under a court order or separated in circumstances that are likely to be made permanent.

If you make a single claim, HMRC may investigate your claim if they have any evidence from their systems or from a credit reference agency that suggests another adult is using your address or there are financial links with another person. If they do, then they may write to you asking for information from you because they think you are living with another person. You can find out more about these investigations on our Revenuebenefits website for advisers.

It is important that you make the correct claim, or if you have a claim already it is important you tell HMRC if your relationship circumstances change otherwise you may be left with a large overpayment. See our 'repaying an overpayment debt section' for more information about repaying overpayments due to relationship changes.

When you make a joint claim, both parties to the claim are responsible for the claim, the information provided, keeping HMRC up to date with any changes and completing the finalisation/renewal paperwork (see our section on how do I renew my claim?). However, either person on the claim can act on behalf of the other.

Exceptions

If your partner or spouse lives abroad (in a country different to your posting) or is abroad for longer than 8 (or 12) weeks, then you must make a single claim without them and, where appropriate, make a fresh joint claim once they are in the UK (or treated as in the UK by joining you on your posting).

How do armed forces allowances and payments affect tax credit awards?

You can read about what counts as income for tax credits in our main tax credits section.

We have set out below some of the main payments and allowances specific to armed forces personnel which are disregarded for tax credits – you should check carefully with HMRC tax credits helpline (keeping a note of the date, time and adviser name) to confirm the treatment of any income if you are not sure whether to declare it on your form.

Not included as employment income:

Non-taxable armed forces travel and operational allowances, which include:

  • Travel facilities provided for the claimant, as a member of the armed forces, for the purposes of going on or returning from leave.
    • Operational allowance paid in respect of service in an operational area specified by the Secretary of State for Defence.
    • Council Tax Relief paid by the MOD to a member of Her Majesty’s forces.
    • Continuity of Education Allowance paid to or in respect of members of the armed forces
  • Non-taxable armed services gratuities – food, drink and mess allowances, for the armed forces and training allowances and bounty payments payable in the consideration of the undertaking of certain training and attaining a particular standard of efficiency.
  • Non-taxable foreign service allowances.
  • Any accommodation allowance which is payable out of public revenue towards the costs of accommodation for members of the armed forces (providing such payments meet conditions specified by the Treasury in regulations) will be disregarded as income for tax credits.

Not included as pension income:

  • A wounds pension or disability pension to the extent it is non-taxable. (War Pension)
  • An annuity or additional pension payable to a holder of the Victoria Cross, George Cross or any other decoration which is non-taxable. (War pension)
  • The non-taxable amount of a pension or allowance (War pension)
  • Where a pension is payable under the Service Pensions Order, any increase in the rate of that pension in respect of a dependent who is not a member of the claimant's family. (War pension)
  • A mobility supplement, or a payment in respect of attendance, paid in conjunction with a war pension. (War pension)
  • Any supplementary pension under Article 29(1A) of the Service Pensions Order. (War pension)

Not included as income

  • Armed forces independence payment

How do I contact HMRC about tax credits?

If you need to contact HMRC, the tax credit contact details, including online options, can be found on the GOV.UK website.

If you receive a letter from HMRC and the letter asks you to call a specific telephone number, you should use that. Otherwise, the standard telephone number for HMRC’s tax credits helpline is, 

Telephone 0345 300 3900, or

Textphone 0345 300 3909

If you are calling from outside the UK, the number to use is

+44 2890 538 192

By post (be sure to make your national insurance number and reason for writing clear on your letter):

  • Complaints, appeals, disputes, change of circumstances, other

HM Revenue and Customs – Tax Credit Office
BX9 1ER

  • Tax credit renewal forms only:

HM Revenue and Customs – Tax Credit Office
BX9 1LR

  • New tax credit claims only:

HM Revenue and Customs – Tax Credits Office
BX9 1HE

  • Correspondence relating to the 2-child limit

HM Revenue and Customs – Tax Credit Office
BX9 1HZ

If you need to contact HMRC about repayments you are making to them or want to make repayments for tax credits which they have overpaid you, you can telephone the number on the letter they send you or the tax credits payments helpline on:

0345 302 1429

Where can I find out more about tax credits?

You can find out more about tax credits by clicking on the links below to read our main tax credits section.

There is more detailed information about tax credits on our website for advisers, Revenuebenefits.

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