Allowances and expenses paid to armed forces personnel and deductions from their income

Updated on 30 July 2021

Employment/Armed forces

In addition to your regular pay the armed forces also pay some of the costs you incur as a result of doing your job. The armed forces do this by:

  • paying you a cash allowance; or
  • reimbursing you for the expenses if you have paid for these yourself; or
  • paying the cost directly to the supplier of the services or the goods.
Illustration of soldiers in silhouette

All the allowances and expenses that you might be entitled to receive are set out in a Ministry of Defence document JSP 752 called “Tri-Service Regulations for Expenses and Allowances”. You will find a copy of it on the Defence intranet or on GOV.UK.

You may also receive various non-cash employment benefits, for example accommodation for you and your family and the costs of the utilities due in respect of this accommodation. The provision of Service Family accommodation is set out in the Ministry of Defence document JSP 464 “Tri-Service Accommodation Regulations”. Again you will find a copy of it on the Defence intranet or on GOV.UK.

Do I have to pay tax and NIC on allowances or expenses?

Some of the allowances and expenses that you will receive from the armed forces are specifically exempt from tax and National Insurance contributions (NIC). This is either by law or because of special agreements between HM Revenue & Customs (HMRC) and the armed forces.

In other cases, where there is a tax and/or NIC liability, the armed forces have decided that they should pay this on your behalf. The armed forces pay this tax/NIC directly to HMRC at the end of each tax year.

There are a few allowances where you do have to pay the tax/NIC yourself. You can find out more about these and how you pay the tax/NIC below.

How do I pay the tax and NIC on the allowances when I am responsible for these?

The usual way that you pay the tax and NIC due on these allowances is through the payroll. The allowance is included in your payslip in the same way that your basic pay is and tax and NIC is automatically calculated and deducted.


If you have received a loan from the armed forces to help you buy a property for you and your family to live in, you do not have to pay interest on this loan. If this loan, together with any other loans or advances that you receive from the armed forces, is more than £10,000 a taxable benefit arises. The Joint Personnel Administration Centre (JPAC) calculate the benefit at the end of each tax year using HMRC’s official rate of interest for beneficial loan arrangements and report the amount to HMRC.

As an example, assume that for the whole of the tax year you have a Long Service Advance of Pay/Forces Help to Buy (LSAP/FHTB) of £25,000 and no other loans or advances. HMRC’s official rate of interest for the tax year is 2.25%. The value of the benefit is £25,000 x 2.25% which is £562. This is not the amount of tax you owe. This benefit, £562, is non-cash income and how much tax you will have to pay depends on your highest tax rate. If your highest tax rate is 20% you will pay tax of £562 x 20% which is £112.40. You do not have to pay NIC on the benefit.

HMRC will collect the tax in various ways:

  • If you submit a Self Assessment tax return you will need to include the benefit in it, and the tax due will form part of your Self Assessment tax payment.
  • If you do not submit a Self Assessment tax return HMRC will include the interest benefit as part of your income when they prepare your P800 reconciliation. HMRC will either ask you to pay any tax due then or include the underpayment in a future year’s PAYE code.

You can find out the official rate of interest on GOV.UK.

How do I claim the costs of laundering my uniform?

If you launder your uniform, you can claim tax relief for the costs of this. You can read more about this on our website.

HM Revenue & Customs came to an agreement with the Ministry of Defence for a new annual Flat Rate Expense Allowance (FREA) for laundering uniforms that covered all tax years up to and including 2013/14 for ratings and other ranks. If you were employed by the Ministry of Defence at March 2014, any backdated refund due was made to you through payroll. Since then the allowance has been given every pay day through your payroll and the only claim you need to make is if you want to claim for costs in excess of the standard allowance (Royal Navy £80; others £100). If you wish to make such a claim you will need proof of the costs and then make a claim using form P87. There is an example showing how to complete form P87 on our forms page.

Some of the people I work with are getting refunds of tax directly from HMRC because of travel; how can I get a refund?

If you use your own car for business travel the armed forces will reimburse you at the motor mileage allowance (MMA) rate. This MMA rate is lower than HMRC’s approved mileage allowance payment (AMAP) rate. You can claim tax relief on the difference between the AMAP rate and the MMA rate from HMRC. You can find out how to make a claim on the page What if I use my own car for business purposes?.

You might also be able to make a claim if you receive MMA payments in respect of home to duty travel (HDT) or get you home travel (GYH(T)). Both HDT and GYH(T) are always paid on a tax-free basis because of the special circumstances of armed forces service; an employee of any other enterprise would not be able to be paid or reimbursed for similar travel on a tax-free basis.

If you are working at a temporary workplace as defined by HMRC, you might be able to make a claim for tax relief as outlined above. HMRC are aware that there are some companies offering to help, for a fee, service personnel to claim this relief and some of the claims may not be valid. You should check with the MOD intranet that your claim is valid. A claim might also be possible if you are using public transport and the armed forces are not reimbursing you for these costs.

⚠️ It is important that you ensure that any claim you make is valid. HMRC will process the claim, without checking it, and send you a refund. They will then check the claim later on and, if they believe your claim is not valid, they will send you a demand to repay the refund back to them.

What deductions can be taken from my armed forces pay?

In addition to the pay and allowances that service personnel receive there are also deductions taken from their total cash remuneration. Normally these deductions are taken from your net pay; net pay is your gross pay plus allowances minus your tax and National Insurance (NIC). The main items to consider are accommodation and food but we mention other deductions too.


The basis on which the armed forces provide you with accommodation and associated services is set out in the Ministry of Defence (MOD) document JSP 464 “Tri Service Accommodation Regulations”. Service personnel do not have to pay any tax in respect of the accommodation provided to them as it is job related and therefore exempt from tax.

You must make a contribution towards the cost of the accommodation. Details of these contributions, generally known as charges, are set out in Volume 3 of the MOD document JSP 754 “Tri-Service Regulations for Pay and Charges” that you can access via the Defence Intranet.

The accommodation charge includes a contribution towards water, sewerage and furniture. If you are living in single accommodation the charge will also normally include a contribution towards the cost of fuel and light. If you have access to a garage or similar then you may have to pay a charge for this.

If you live in family accommodation and gas and/or electricity is provided via an armed forces supply then you will have to pay a separate fuel and lighting charge. If the utility supplier invoices the property separately you will settle these bills directly.

In addition to the accommodation charge, service personnel make a Contribution in Lieu of Council Tax (CILOCT). The amount of this contribution is determined by the MOD.

JPAC deduct these charges from your net, that is, after tax, pay.


Service personnel may pay a Daily Food Charge (DFC) in respect of food provided to them at certain locations.

JPAC deduct this charge from your net (after tax) pay.

Other deductions

You may choose to contribute voluntarily to various schemes. If tax relief is available, for example under the Payroll Giving Scheme, then JPAC deduct the payment from your gross (before tax) salary and this means that you receive the tax relief automatically when you make the payment.

If you have taken out a loan under either the Forces Help to Buy (FHTB) or the Long Service Advance of Pay (LSAP) scheme then you will also be paying back this loan in accordance with the rules of the scheme. JPAC deduct these repayments from your net (after tax) salary.

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