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HMRC internal manual

Employment Income Manual

Tax treatment of armed forces: regular forces


Armed forces’ pay, which includes pay, pensions and other earnings from service in or with the armed forces of the crown, is taxable as employment income and is subject to PAYE. Liability in this respect is, in general, dealt with by Public Departments, local office responsibility being mainly confined to:

  • the procedure for personnel entering or leaving the regular forces and
  • dealing with liability arising on payments to members of the reserve and auxiliary forces (see EIM50110).

Exempt payments

Section 297 ITEPA 2003 exempts the following payments to members of the armed forces if the Treasury certifies that they are made for the purposes indicated:

  • payments made instead of food and drink normally supplied to members of the armed forces
  • a contribution to mess expenses.

Cost of leave travel facilities

Travel facilities provided for members of the naval, military or air forces of the Crown going on, or returning from, leave are exempt from tax. The exemption is in Section 296 ITEPA 2003. It applies:

  • whether or not a charge would have arisen by virtue of Section 62 ITEPA 2003 (earnings) or Section 203 ITEPA 2003 (benefits ) or Section 87 ITEPA 2003 (vouchers ) and
  • not only to travel vouchers and warrants but also to allowances and other payments for, and in respect of, leave travel.


As regards:

  • pay and allowances of members of the reserve and auxiliary forces, see EIM50110.