The Ministry of Defence and HMRC have recently agreed a new Flat Rate Expense for some MOD staff, giving them tax relief on the cost of washing their uniforms. This is good news and means you could be owed an MOD tax rebate and pay less tax in the future.
The agreed flat expense amounts per tax year are:
- Royal Navy £80
- Army £100
- Royal Marines £100
- Royal Air Force £100
How do I get the allowance?
This allowance is allocated through an amended tax code for tax year 2013-14; it will be listed as ‘Earlier Years Adjustment’. For most people, this revised code number was allocated to the pay for March 2014 although a few took effect in February 2014’s pay. For most, this meant paying less tax in the month where the revised tax code was applied (for individuals not presently in employment who must complete a Self Assessment tax return, HMRC added the adjustment to the statement of account).
How far back does it go?
The allowance will also be given retrospectively to the tax year that began on 6th April 2008 (this will of course depend on length of service). Service personnel will be entitled to their full expense entitlement for each year of service; the entitlement is not reduced if the service period began or ended part way through a tax year.
HMRC will also include any due RPS repayment supplement (this is compensation paid to customers where there has been a delay in the repayment). This will be paid at an average annual interest rate of 0.5%.
Here are two examples showing what you could be due:
Example 1
A Royal Navy recruit commences service in September 2009 and remains with the Navy until March 2012. The recruit was entitled to FREA for three tax years: 2009-10, 2010-11 and 2011-12) and the rate is not adjusted for the years of commencement (2009-10) and cessation (2011-12). The individual remains a basic rate taxpayer throughout the tem of service.
- 2009-10 £80 @ 20% = £16 + Repayment supplement = 16.32
- 2010-11 £80 @ 20% = £16 + Repayment supplement = 16.24
- 2011-12 £80 @ 20% = £16 + Repayment supplement = 16.16
Total Repayment due £48.72
Example 2
In November 2013, another individual joins the RAF as “Other Ranks” and is entitled to the FREA for one year (2013-14) which is not apportioned for that year. Because there has been no delay in making the payment, no repayment supplement is due. This individual too is a basic rate taxpayer.
- 2013-14 £100 @ 20% = £20 Total Repayment due £20
The allowance, from 6 April 2014, will be allocated by your respective payroll department before the tax is deducted.
Service personnel retain an option of requesting a deduction from actual expenses instead of receiving FREA. Expense claims must be made in writing to HMRC supported by evidence for the claim.
What else can I claim for?
A uniform allowance was agreed between the MOD and HMRC which allows for less tax to be paid to cover the cost of uniform maintenance.
You can find out more about MOD travel tax refunds in our free MOD tax guide and you can use our MOD mileage calculator to estimate what your tax refund could be worth.
