THE Ministry of Defence have been accused of orchestrating an “elaborate stunt”, after claiming that 8000 military personnel are paying higher taxes in Scotland than they are in England.
Yesterday, Defence Secretary Gavin Williamson announced that his department would spend £4 million to compensate military personnel who would see their tax rate increase because they paid the Scottish rate of income tax.
The Ministry of Defence (MoD) said there were around 11,000 servicemen and women who would need to pay the Scottish rate of income tax, and around 8000 of them would be “negatively affected” by changes brought in by the Scottish Government.
The minister said annual mitigation payments of between £12 and £1500 would be handed out to troops, so that all British soldiers, sailors and pilots would pay the same income tax, regardless of where they are stationed.
The top-up payments will go to regular personnel who pay Scottish Income Tax, regardless of where in the world they are serving.
But according to research by the Scottish Parliament Information Centre (SPICe), the increase in the personal allowance from £11,500 to £11,850, means only those earning more than £33,000 will pay extra tax.
The Scottish changes increased the higher and top rate of income tax to 41p and 46p respectively.
A new intermediate rate of 21p on income between £24,000 and £43,430 was created, along with and a 19p “starter rate” on earnings between £11,850 and £13,850.
There was some doubt that 8000 of the 11,000 military personnel paying the Scottish rate of income tax were all earning more than £33,000.
Speaking on a visit to Glasgow, Williamson said: “The Nat tax which is being imposed by the SNP is affecting 70% of service personnel in Scotland.
“It’s right, and down to the campaigning of Scottish Conservative MPs, that we’ve addressed that injustice.”
The Scottish tax rate plans will also see some lower earners pay less tax.
Green MSP Ross Greer said: “So the UK Government are compensating higher earning MoD personnel in Scotland who pay slightly more tax but are not compensating your average squaddie in England, who will also pay slightly more tax than if they lived in Scotland?”
“Almost like this is an elaborate stunt...”
The MoD said it had concerns the changes could result in Scotland becoming a less attractive place for military personnel to be posted and expects the compensation to help with the recruitment and retention of specialist workers, such as aircraft and submarine engineers.
But the Scottish Government said the armed forces community in Scotland benefits from a range of services not available elsewhere in the UK.
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.”
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