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HMRC internal manual

Employment Income Manual

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HM Revenue & Customs
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Tax treatment of armed forces: reserve and auxiliary forces: taxable payments: exempt payments

Section 298 ITEPA 2003

Taxable paymentsPayments to members of the reserve and auxiliary forces are income for tax purposes unless they are covered by the exemption in Section 298 ITEPA 2003 (see below). Taxable payments include:

  • fixed payments to non-commissioned officers of the regular reserve
  • training pay and allowances
  • the special obligation bounties payable to members of the Volunteer Reserve and Auxiliary Forces for liability to be called out in an emergency
  • the pay of officers, adult warrant officers and adult instructors of the Cadet Forces.

Exempt paymentsSection 298 exempts from tax the following payments:

  • training expenses allowances paid at hourly rates for a period of part-time training of less than eight hours for which ordinary pay and allowances are not granted
  • a bounty paid to a member of reserve or auxiliary forces, including the Royal Irish Regiment, for undertaking specified training and attaining a prescribed standard of efficiency.In addition, the bounty paid on call-up for a period of actual service should not be regarded as taxable. This is payable in addition to any taxable bounty shown above.