Should it reach more than 100,000 signatures, it will be considered for a debate in Parliament
His Majesty’s Treasury has issued an important update following a campaign calling for the removal of pension tax for older members of the armed forces. The petition, which has now amassed over 27,000 signatures, described this tax as a complete ‘injustice’ and stated that its removal at the age of 60 would promote more ‘balance’.
As a general rule, money taken out of pension savings is taxed in a similar way to employment income or any other earnings. This means you won’t usually pay any tax if your total annual income is less than your Personal Allowance, which is typically £12,570.
Unlike many other pensioners, those in the Armed Forces Pension Scheme get several benefits, including Early Departure Payments, tax-free lump sums, inflation-linked pension increases, and no monthly salary contributions. However, although the Government ‘hugely values’ their efforts, it doesn’t plan to completely eliminate their pension tax at present.
In an update issued on September 15, the Treasury said: “The Government hugely values the service of our armed forces but currently has no plans to make Armed Forces pensions tax free at age 60.
“We are profoundly grateful for the service of members of our armed forces, and therefore it is only right that they are entitled to a pension that ensures dignity in retirement.
“Members of the Armed Forces Pension Schemes do not have to pay contributions to their pension schemes. These are the only public service pension schemes that are non-contributory.
“The Government currently has no plans to make Armed Forces pensions tax free at age 60. The Armed Forces Pension Scheme provides tax-free lump sums to members on retirement. Other pension payments from the Armed Forces Pension Scheme are treated as taxable income under UK tax law.
The response continued: “This tax treatment reflects the fact that pensions are forms of deferred income and, as such, are taxable. This same tax treatment applies to payments from all occupational pension schemes.”
As of now, the petition entitled ‘Make the Armed Forces pension tax-free’ has amassed more than 27,000 signatures. Should it reach more than 100,000, it will be considered for a debate in Parliament.
The full petition reads: “Make the Armed Forces pension at age 60 tax-free. We think this would balance out what we see as an injustice.”
For additional information, head to the UK Government and Parliament website here.
Get all the hottest shopping deals, cash saving tips and money news straight to your phone by joining our new WhatsApp Community – The Money Saving Club. Just click this link to join https://crnch.it/eutplxS1
We also treat our community members to special offers, promotions, and adverts from us and our partners. If you don’t like our community, you can check out any time you like.
If you’re curious, you can read our Privacy Notice here https://crnch.it/jeQqC872