Armed forces
Employment Tax
Guidance
There are special tax rules that apply to members of the regular UK armed forces, reserve and auxiliary forces, and members of visiting forces.
For all categories of UK service personnel, the basic rule is that all pay, pensions and other income is taxable as employment income, liable to national insurance contributions (NIC) and subject to PAYE. However, there are some particular exemptions for payments and benefits that would normally appear to be taxable. These are described below. Unless otherwise stated, exemptions for NIC also apply where there is an exemption from tax. For more, see Simon鈥檚 Taxes E4.746.
Zero-rate of secondary Class 1 contributions for armed forces veterans
The Government introduced a zero rate of NIC for employers of veterans in their first year of civilian employment from April 2021. This removes any employer鈥檚 NIC liability on the veteran鈥檚 salary up to the upper secondary threshold (see the Overview of NIC Classes, rates and thresholds guidance note for rates).
The legislation initially applied for the three years up to 5 April 2024. However, as confirmed in Autumn Statement
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