The payments are due to military personnel in Scotland paying more tax than their colleagues based elsewhere in the UK.
Deidre Brock, Shadow SNP Spokesperson for Devolved Government Relations, asked in a written question:
“To ask the Secretary of State for Defence, how many financial mitigation payments have been made to MoD personnel based in Scotland in relation to the Scottish rate of income tax; and at what salary level those payments began.”
Tobias Ellwood, the Parliamentary Under-Secretary of State for Defence, answered:
“No financial mitigation payments have yet been made to Ministry of Defence personnel resident in Scotland in relation to higher rates of Scottish income tax. Mitigation payments for Tax Year 2018-19 will be made in June 2019 to those with taxable earnings of £27,200 or more. Mitigation payments for Tax Year 2019-20 will be made in June 2020 to those with taxable earnings of £28,193 or more.
It is estimated that up to 8,000 payments will be made in June 2019 and up to 7,000 payments in June 2020.”
Since April last year in Scotland, anyone earning more than around £26,000 in Scotland has paid more income tax. The change meant around 70% of personnel based in Scotland were facing higher tax bills.
Defence Secretary Gavin Williamson said:
“It is completely wrong for the brave men and women of our Armed Forces to be punished for serving in Scotland by unfair raids on their pay packets by the Scottish government. That’s why we have taken this urgent action to ensure that our troops are treated equally and fairly.”
Scottish Government finance secretary Derek Mackay said:
“We are fully committed to supporting the armed forces community and armed forces families in Scotland benefit from services not available elsewhere in the UK, such as free school meals, prescriptions and eye tests, and tuition fee and living cost support in higher education when they are ordinarily resident.
It is disappointing that, despite making an offer to discuss the differential taxation of military personnel, the Scottish government has not been consulted on the proposal announced by the MoD.”
The financial mitigation measures will:
- Be payable to all regular personnel who pay Scottish Income Tax, regardless of where in the world they are serving. Mitigation payments of between £12 and £1,500 will be paid.
- Cover personnel for tax year 2018/19 and will be a single payment made retrospectively
- The case for financial mitigation will be reviewed annually
According to the BBC, people across Scotland who earn more than £24,000 pay 21% under the new system. Higher (£43,431 – £150,000) and top rates (earnings more than £150,000), have been increased to 41% and 46% (40% and 45% across the rest of the UK).