Tax Free Pension 15 April 2011 at 2:30PM in UK armed forces MoneySaving 4 replies 4.1K views

Hinnibell

Is there anyone out there that has a level three gallantry award? Are you aware that your military pension is tax exempt? My husband has the MC and has just found out about this - he is due to leave after his 22 yrs - but no-one else seems to be aware of this?? Is anyone else familiar with this?

molerat

I believe it is only the additional pension that comes with the award that is tax free and not the whole of his pension.

Hinnibell

Hi Molerat,

I think that this was withdrawn in 1993. According to HMRC (who my husband has spoken to) it IS tax free.
See http://www.hmrc.gov.uk/manuals/eimanual/EIM74307.htm

It seems that the RBL, SPVA and the Forces Pension Society are not aware of this...

Hinnibell

EIM74307 - Pensions: particular occupations: armed forces: awards for bravery

Section 638 ITEPA 2003

Section 638 provides that no liability to income tax arises on a pension or annuity if it is paid to the holder of a specified award for bravery in respect of the award. The specified awards are –

• the Victoria Cross
• the George Cross
• the Albert Medal
• the Edward Medal
• the Military Cross
• the Distinguished Flying Cross
• the Distinguished Conduct Medal
• the Conspicuous Gallantry Medal
• the Distinguished Service Medal
• the Military Medal
• the Distinguished Flying Medal

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molerat

Your link above states exactly what I said