Money matters

Please check our COVID-19 section for up-to-date information, as the coronavirus outbreak may affect the advice given on this page.


01   What is the pension annual allowance?

The annual allowance is the limit on the amount you can contribute towards your pension each year, without incurring a tax charge. In 2016, the annual allowance dropped to £40k per year for those earning £150k or less.

For some service personnel, their annual contribution to their pension can go over £40k, resulting in them being liable for tax.

Whilst this is more likely to be the case for senior officers, officers and some other ranks can be affected at some points during their career, due to exceptional events that can lead to sudden spikes in the growth of their pension pot during one tax year, such as promotion or reaching their immediate pension point.

Any unused allowance can be carried over from the three previous years.

What if the service person has other pensions?

The £40k limit is across all pensions you may hold and not per pension. Therefore, you need to take into account all pension contributions the service personnel may make.

How will personnel know if they have exceeded the allowance?

Service personnel who have exceeded the annual allowance should receive a letter from Veterans UK confirming this is the case and will need to submit a tax return. They aim to send out the letters in early October.

Service personnel are able to check whether they are liable for a tax charge by using the HMRC Annual Allowance Self-Assessment calculator at:

Where will the letter be sent?

The letter will be sent to the primary address on JPA so it is important that this is kept updated.

How do you pay if there is a tax liability?

If there is a tax liability, there are some options:

  1. If the tax charge is less than £2,000, you cannot apply for the scheme to pay and you must declare the charge on your tax return and either pay the money upfront or ask for a reduction in your personal allowances and effectively pay the cost from your salary over the next 12 months.
  2. If the tax liability is for a sum of £2,000 or more, you have the choice of asking the scheme to pay the charge on your behalf.

What will be the impact on the pension if you opt for the scheme to pay?

The scheme administrators will calculate the amount the pension and lump sum is to be reduced to ensure it gets its money back.

There is a scheme pays calculator available at:

What if families need more information?

If you need further or more detailed advice, we suggest that you contact The Forces Pension Society. They are able to provide generic advice, but you will need to become a member to receive detailed personalised information (£39 per year).

Further information can be found here:

Back to top

02   Investment advice for families posted, or due posting, overseas

In collaboration with UK Finance, the MOD Armed Forces Covenant team has produced a guidance sheet ‘Investment services and advice for Service personnel while assigned overseas’.

Back to top

03   MoneyForce

For useful advice on anything from budgeting and financial planning, to savings and debt, visit the MoneyForce website

You’ll find useful tools and calculators to help manage your family’s finances as well as useful links for more information and support.

Useful downloads:

MoneyForce Budgeting factsheet
MoneyForce Budgeting infographic
MoneyForce Debt factsheet
MoneyForce Debt infographic

Back to top

04   New Help to Save scheme

The Government has launched a ‘Help to Save’ scheme across the UK to help working families on tax credits or Universal Credit to build up savings. The new scheme rewards savers, with the Government giving you 50p for every £1 that you manage to save.

To open an account, you need to be resident in the UK and either:

  • Claiming Universal Credit and have employment earnings of £542.88 or more for the last month
  • Be getting tax credit payments and be eligible for working tax credit.

You are eligible for working tax credit if you work 16 hours a week or more and are either a lone parent or have a partner who is eligible for Carer’s Allowance. Otherwise couples must normally be working at least 24 hours a week between them (with one partner working at least 16 hours).

If you are a couple who meet these tests, you can each open up an individual account; however, it’s not possible to open a joint account.

You’ll need a Government Gateway account to apply and can set one up when you apply at before September 2023. Find out more here.

Back to top

05   Finding suitable insurance

We are regularly informed by service families that finding insurance can be extremely difficult. The British Insurance Brokers’ Association (BIBA) is the UK’s leading general insurance intermediary organisation. BIBA is committed to helping Forces personnel with challenges such as insuring belongings while abroad, in transit or in storage, regular home moves (including short notice postings aboard), covering military kit, using a car on base and having ‘licence to occupy’ cover if you live in MOD owned accommodation.

If you are arranging insurance, you could find a specialist through their ‘Find-A-Broker’ service, which can transfer you directly to a broker who provides suitable advice and insurance cover.

For more information, call 0370 950 1790, or visit their website at

Back to top

06   National Insurance Credits for service spouses and civil partners

On 6 April 2016, the National Insurance (NI) credit to protect the state pension of spouses and civil partners of service personnel was backdated to 1975.

This means that if you were posted overseas between 1975 and 2010 you could benefit.

Class 3 NI credits were introduced under the Armed Forces Covenant in recognition that overseas postings can affect the ability of the spouse to work and pay NI contributions, leaving many with a gap that can affect the amount of state pension you receive in retirement.

Defence Secretary Michael Fallon said: “We are making sure that military spouses and partners who spend time based overseas get the State Pension they deserve. This is the latest step under the Armed Forces Covenant to ensure that service personnel and their families are treated fairly.

The new Class 3 credits do not replace the existing Class 1 NI credit for those who have accompanied a partner on a posting since April 2010, and which contribute not only towards entitlement to pension, but also towards Employment and Support Allowance, Jobseeker’s Allowance and Bereavement Benefits.

AFF in Action

However, AFF is aware that for some spouses, whose time abroad did not correspond with the UK financial year – April to April – there may be a gap in entitlement. We are also looking further into claims that those who’ve served in Northern Ireland are unable to claim for that period.

Am I eligible to apply?
Service spouses and civil partners are eligible to apply for Class 3 NI credits if you:

  • reach state pension age on or after 6 April 2016, that means you were born on or after 6 April 1953 (for women) or 6 April 1951 (for men); and
  • are or have been married to/in a civil partnership with a member of the Armed Forces; and
  • have accompanied your spouse or civil partner on a deployment outside the UK at any time since 6 April 1975; and
  • at the time of the posting your spouse or civil partner must have paid, been treated as having paid or been credited with UK National Insurance.

You can still apply if you are now widowed, divorced or have had your civil partnership dissolved, provided you were married or in a civil partnership at the time you accompanied your partner abroad.

Some service spouses or civil partners who meet the above criteria will not have a gap in their NI records and so will not need to apply for the new credits.

To find out how much your State Pension is worth, and to check whether there are any gaps in your NI record for the period you were overseas, visit  and search ‘Check your State Pension’.

How do I apply?
You can apply for Class 3 NI credits anytime from 6 April 2016. There is no time limit in applying for the credits, although if you apply after you reach State Pension age, increased State Pension might not be paid for periods before the date of your application.

For more information, click here.

Back to top

07   Army families can avoid excess mortgage fees if they own a home and are forced to rent it out due to postings

AFF is thrilled that after a great deal of campaigning, army families posted within the UK or overseas are now able to rent out their homes without facing higher mortgage charges or having to change their existing mortgage deal, saving them time and money.

Previously, many army families who rented out their homes during a posting had to change their residential mortgage to a buy-to-let mortgage, often incurring new product charges and an increased rate of interest.

The Government recognises that service personnel have a right to own a home and plan for the future. In respect of mortgage types, service personnel, unlike civilians, do not need to have a buy-to-let mortgage. In 2016 it was announced that 47 of the UK’s largest banks and building societies would allow service families to rent out their home in the UK if they could not live in it. Your evidence is vitally important, so, if you are experiencing any difficulties securing or changing a mortgage as a result of service life, contact our Money & Allowances Specialist at

Back to top

08   Can you claim Marriage Allowance?

Does the non-serving partner in your family earn less than £11,000? If so, you could pay less tax by applying for the Marriage Allowance.

The allowance lets couples transfer a proportion of the amount you can earn tax-free each tax year between you. To apply you must be married or in a civil partnership, one of you must earn less than £11,000 and the other must be a basic rate taxpayer.

Across the UK, only 10 per cent of eligible couples claim the allowance. You can register at any point in the tax year to gain full benefits. To apply, visit

Back to top

09   Changes to lettings legislation

Do you own a property and let it out? If so, changes to tax regulations were implemented in April 2017 that may affect you.

Our Money & Allowances Specialist outlines the new rules… (original article appears in Army&You magazine autumn 2016)

ANYONE who owns a property and rents it out has to pay tax on the rental income. However, you can currently deduct certain costs before working out your tax bill, such as agent’s fees, maintenance and repairs.

Under previous regulations, you could also include the interest portion of your mortgage payment, but new rules mean you can no longer offset this.

Tax will be applied to the rental income you receive, rather than what is left after your mortgage has been paid. The changes will be implemented gradually to come into full force by 2020/21.

AFF is concerned that this will have serious implications for some of you, wiping out profit you may rely on or, more worryingly, leaving some of you in debt.

Many of you own a home and either have to move into SFA on posting to be able to stay together as a family, or have bought a property ready for when your soldier leaves the army.

“This new rule is likely to have a big impact on us,” said army family member Gary Firth. “Offsetting the mortgage interest currently keeps us below the tax threshold. We make no profit at all from the rent we charge. We’re currently posted 150 miles away, so there’s no way we can live in the house unless we choose ‘married unaccompanied’. If we sell, we have to start again on the housing market in a few years. Surely this rule goes against the MOD encouraging soldiers to plan for the future.”

AFF feels that army families are being unfairly disadvantaged by the new rules.

Chief Exec Sara Baade said: “Some families are ‘accidental landlords’ due to the nature of service life and these changes would result in an unfair penalty on families who need to move to meet service needs.”

We have been pushing for an exemption for service families who own only one property and have heard from many of you who feel you will be affected.

We have raised the issue at the highest levels, but current feedback from decision makers is that there will be no exemption granted to service families who only own one property.

We will continue to highlight the negative impact this policy will have on army families and recently submitted evidence to RUSI on a report on the MOD Housing finance strategy.

The National Landlords Association (NLA) have investigated this legislation change and provide further information and advice on their website

You can view our brief on the issue here or contact our Money & Allowances Specialist to discuss your concerns at

Back to top

10   Bedroom Tax - AFF investigates

Whether or not a member of the Armed Forces lives at home with their parents is a matter for the Local Authority (LA) to decide based on all the available facts.

It may be that someone living in SLA is treated as living at home but equally SLA can be treated as a permanent home.

Adult children judged by the LA to be living permanently in SLA are not treated as living at home with their parents during periods of deployment.

If the LA decides that the permanent home is with the parents, and the parents receive Housing Benefit (HB), then they would be subject to a non-dependent deduction which could extinguish HB entitlement.

This is because all working non-dependants are expected to contribute to their living expenses and there is no exception for Armed Forces personnel unless they are deployed on operations.

AFF investigates:

AFF has investigated the changes to Housing Benefit Regulations and whether army families face any disadvantage in comparison to other families.

Unfortunately, there was not enough evidence to determine the overall impact on army families and state our view on this issue.

We therefore encourage families affected by the changes, or with their own view on this matter, to contact us at

The points which AFF has considered in this argument:

  • The publicised amendments for families of serving personnel assist only a small minority of families. These could include Reservists or those who choose not to live in Single Living Accommodation (SLA) because their parents live nearby. This was poorly communicated to families.
  • All parents have difficult choices to make about downsizing once their children move away from home. This applies should you own your own home, rent privately or claim Housing Benefit.
  • Families might face financial difficulties if Housing Benefit is reduced due to under occupancy and a room is retained for their soldier.
  • Should serving personnel contribute to the family finances, then they would effectively be paying twice for accommodation.
  • Social housing is scarce. Where families are able to downsize to smaller properties, this could increase the availability of suitable social housing for those families leaving the services.
  • Whilst there has been considerable upgrading of SLA, some serving personnel do not have a room of their own and instead share multiple occupancy rooms. It could be unfair to judge this accommodation as a permanent home. DIO recognise there is still much work to do to upgrade SLA.
  • Special consideration might be required for families until personnel have successfully completed Phase 1 and 2 Training.
  • There is clearly disparity across areas, as local authorities have the final decision whether a soldier’s home is classed as with their parents or in SLA.

AFF has been made aware that some army families have been successful in overturning the initial decision of local authorities relating to Housing Benefit at tribunal.

This has resulted in Armed Forces personnel being included in the calculation of the number of persons occupying the property. Click here to read about one army family’s success with an appeal.

Back to top

11   Government help to buy ISA

Good news for first time buyers: you could save up to £200 a month towards your first home with a Help to Buy ISA, and what’s more, the government will boost your savings by an extra 25 per cent – that’s an additional £50 bonus for every £200 you save.

If you save £12,000, the government will boost your total savings to £15,000 when you purchase your first home, and you can earn up to four per cent tax-free.

Providers are free to set their own interest rates so, as with any savings product, it’s a good idea to compare and shop around for the best option for you.

Find out more about the scheme and which providers you can apply to for your Help to Buy ISA online, by telephone or in branch.

For more information, click here.

Back to top

12   Improved access to student loans for army spouses and partners: an AFF win

As of 1 August 2017, army families posted overseas who wish to undertake a qualifying UK based university or college course can access a loan via Student Finance England. This applies to both full and part time courses, and you no longer need to be in the UK for the first day of the course to qualify.

An AFF win
Last year, we were proud to publicise this AFF win, announced by the Universities Minister Jo Johnson, after much lobbying and joint working with the Department for Business, Innovation and Skills (BIS).

The change applies to new students starting a distance learning course in 2017/18 and also to those who have already started a distance learning course before and who are continuing that course in 2017/18.

Unfortunately, this does not apply to those from the devolved nations. To be eligible, you must qualify for the English student support package.

Putting families first
AFF continues to prioritise spousal employment and training, and this includes those posted overseas who sometimes cannot work and so choose to undertake a course during that time.

Find out more
For more information and full eligibility criteria, visit

Back to top

13   Entitlement to claim Jobseekers Allowance (JSA) for spouses and adult children of service personnel

Previous residence rules exempted service spouses and adult children returning from overseas to claiming Jobseekers allowance for three-month residence requirement.

However, after AFF identified that army families returning from overseas assignments would be disadvantaged by that requirement, the Department for Work and Pensions (DWP) announced that spouses and children (up to 21 years) returning to the UK after accompanying service personnel on overseas assignments, will be exempted from the three- month residence rule.

AFF can confirm that anyone returning to the UK and wanting to apply for income-based JSA will still be asked to answer a series of questions about their circumstances during a ‘Habitual Residence Test’ interview – a test to ensure all JSA claims are legitimate. However, as a military dependant, you can apply as soon as you return to the UK.

For more information about the changes and the Habitual Residency test, click here.

Back to top

14   Mortgage barriers for Armed Forces families

AFF has received a number of queries from families experiencing barriers when applying for a mortgage. We are keen to remove these disadvantages and we want lenders to understand that due to our Armed Forces lifestyle, our circumstances are different to civilians and therefore more understanding is required.

Whilst AFF recognises that frequent moves and BFPO addresses can make credit checking for commercial products difficult for lenders, we ask that they take this into consideration and work to remove disadvantage rather than precluding Armed Forces families from enjoying the same access to commercial products as civilians.

AFF is delighted that the Armed Forces Covenant is raising awareness amongst financial organisations about issues service families face compared to our civilian counterparts. Many organisations have signed the Armed Forces Covenant and have agreed to deal with mortgage applications manually (rather than automated) for serving soldiers. AFF is working with the Armed Forces Covenant team to help encourage other financial institutions to step forward and give a fairer deal to army families.

The Armed Forces Covenant states: those who serve in the Armed forces should not be disadvantaged because of their occupation. Mortgage applications will be treated fairly and consistently with civilian counterparts and will not be automatically rejected purely on the basis of a BFPO address. As part of its commitment to the Armed Forces Covenant, the MOD is working with several organisations to improve access to a wider range of commercial products and financial services for serving personnel.

The government and representative bodies from the financial sector have produced guidance notes, on the GOV.UK website, offering advice, tips and practical help for Armed Forces personnel applying for personal unsecured and mortgages.

Back to top

15   Financial top tips for service personnel

A series of ‘top tips’ offering service personnel practical advice on financial issues has been produced by the government and representative bodies from the financial sector.

As part of its commitment to the Armed Forces Covenant, the MOD is working with several organisations to improve the ability of Armed Forces personnel to gain access to a wider number of commercial products and financial services, and lessen associated difficulties that are often experienced because of their unique lifestyle.

Click here to read the full guidance.

Anyone experiencing difficulties should contact AFF’s Money & Allowances Specialist at

Back to top

16   Sure Start Maternity Grant - overseas applications

The original instruction from the MOD stated that Sure Start Maternity Grants (SSMG) for those living overseas should be claimed from the Department for Work and Pensions (DWP) through a single point of contact. This address has since changed and applications should go through the DWP Social Fund department.

All applicants have been requested to annotate ‘HM Forces Staff’ on the personal details part of the form and also asked to try and include as much relevant information as possible. The completed application forms should go to:

Wembley Benefit Centre
Mail Handling Site ‘A’
WV98 1HE

Tel: 0845 6036 967

Back to top

17   Moving back to the UK? Think about your finances

If you are moving back to the UK after a stint overseas, it is a good idea to consider the implicationson your finances.

The following points give a general guide of what to expect:

  • Loss of entitlement to LOA will mean less cash at the end of the month.
  • If you have been in Germany you will no longer be entitled to receive Kindergeld on your return to the UK.
  • If the non-serving spouse was employed overseas, there may be a temporary loss of second salary until a UK job is secured. It is a good idea to find out about getting a Good Conduct Certificate before returning to the UK as many employers will ask you for one.
  • No more petrol coupons. Expect to pay more for fuel at UK pumps. It might even be worth considering changing to a more fuel-efficient car.
  • Loss of tax-free perks on weekly shop and other goods.
  • UK SFA charges could be higher, both due to CAAS banding and because in some countries SFA charges are downgraded by a level.

And don’t forget…You will now have the privilege of paying for a TV licence, road tax (also on the increase), higher childcare costs and tax on a new car.

Back to top

What our families say about AFF

“AFF - just a thank you for all that you do!!”

“What an awesome organisation”

“Thank you so much Army Families Federation!”

Find out more
12,563enquiries received in 2018
3,284responses to our Big Survey 2018
33,342 unique website views during April
100%positive feedback at our Foreign & Commonwealth events in 2018