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Regulations are to be introduced to ensure retired members of the armed forces and their families will not be taxed on a number of benefits: tuition fees paid on their behalf under the further and higher education commitment introduced in 2009, lump sums they receive via the resettlement commutation, resettlement grants and gratuity earnings schemes introduced in 2010, and the provision of independent inquest advice.
Informal consultation at an official level has taken place on the matter through the Ministry of Defence.
The legislation will have effect for the payment of tuition fees on and after 6 April 2009, and for the payment of lump sums and the provision of independent inquest advice on and after 6 April 2010.
The tuition fees paid since 2009 are employer-financed retirement benefits schemes under ITEPA 2003, s 393A.
When benefits under the schemes are received by retired members of the armed forces, a tax charge arises under s 394. The benefits provided by a former employer are taxable as income of whoever receives the benefit.
These changes only affect individual householders who are retired members of the military eligible to have tuition fees paid or receive the relevant lump sums and to the families of those who have died in service.
Former members who had not retired were exempt under s 411.
