Armed Forces Tax Reliefs 2026/27: LSA, Op Allowance, GYH

UK Service personnel benefit from a small number of dedicated tax reliefs that reflect the unique demands of military service. This guide covers the principal ones for 2026/27 - Operational Allowance, LSA, GYH Travel, the Continuity of Education Allowance and the flat rate expense for laundering uniforms - and how each interacts with the Service person's tax position. Every figure below is cited to the statute, the AFPRB report or the MOD page it comes from.

Operational Allowance - tax-free

Operational Allowance is the daily payment to Service personnel serving in a specified operational location where the allowance has been declared payable. MOD publishes the rate as £29.02 per day, "over the course of a six-month deployment, this would add up to a total of £5,281.64", paid with salary as a lump sum at the end of the deployment (MOD Discover My Benefits - Operational Allowance, page last updated 24 January 2024). Operational Allowance is:

• Exempt from income tax, by statute rather than by concession.
• Paid for each day spent in a specified operational location, processed automatically by Unit HR.
• Available to Regular personnel (other than the Military Provost Guard Service), mobilised reserves and Full Time Reserve Service on Full or Limited Commitment.

The exemption is in section 297A of the Income Tax (Earnings and Pensions) Act 2003: "No liability to income tax arises in respect of payments to members of the armed forces of the Crown of the Operational Allowance", the allowance being one "designated as such under a Royal Warrant made under section 333 of the Armed Forces Act 2006" (ITEPA 2003 s297A). It is a statutory exemption, not an HMRC dispensation: dispensations were abolished from April 2016. Which locations attract the allowance is not published; MOD directs personnel to their Unit HR.

The £29.02 rate is the rate MOD currently publishes. Operational Allowance is outside the AFPRB remit and does not appear in the Fifty-Fifth Report, so the 3.6% uplift the AFPRB recommended for compensatory allowances from 1 April 2026 does not reach it. Check JSP 752 chapter 11 section 4, or your Unit HR, before relying on the figure for a current deployment.

On the payslip, Operational Allowance appears as a separate line - it is NOT added to gross pay for tax calculation purposes. The Service person sees it in the gross-to-net summary as a tax-free element.

To check whether those tax, NI and AFPS 15 lines look right on your own JPA slip, see How do I check my payslip is correct?.

Longer Separation Allowance (LSA)

LSA is paid to Regular personnel for extended separation. It runs in sixteen Levels, and the Level is set by cumulative qualifying separation across a career, not by the length of one detachment. That is the single most misunderstood thing about it: Level 1 covers everything up to 280 days, so a first six-month deployment is a Level 1 deployment.

These are the recommended rates from 1 April 2026, every one of them from AFPRB Fifty-Fifth Report 2026, Appendix 3:

Reaching Level 9 takes 1,541 days of qualifying separation, which is over four years of it accumulated across a career. Level 16 is real but rare: MOD's own analysis, quoted at paragraph 7.56 of the same report, found "54% fewer personnel in receipt of LSA level 16 in 2024-25 than during the last quinquennial review".

LSA is taxable under standard rules. It is not pensionable: AFPS 15 defines pensionable earnings as "Basic pay, but excluding allowances, expenses, bonuses, financial incentives, Loan Service Pay, and any form of Recruitment and Retention Pay" (MOD, AFPS 15: Your Pension Scheme Explained, glossary). LSA is a compensatory allowance, so it is outside that definition. All rates of LSA rose by 3.6% from 1 April 2026 in line with the main pay award (Recommendation 13 of the same report). Eligibility criteria are published internally by MOD, so JSP 752 and your Unit HR are the place to confirm which days qualify.

GYH (Get You Home) Travel

Get You Home Travel helps with "the cost of travel when you return to your home from your duty station at weekends, during stand down and in periods of leave". Two things about it are routinely got wrong:

• It is not paid at HMRC's Approved Mileage Allowance Payment rate and it is not a reimbursement of actual spend. MOD pays it "as a daily rate, which increases the further you travel up to a maximum of 530 miles".
• The qualifying home must be a property you own or rent, be your main residence when you are not at your duty station, and be more than 50 miles from the duty station.

Source: MOD Discover My Benefits - Get You Home (page last updated 3 June 2024). The rates themselves are in JSP 752 chapter 3 and are not published on that page, so check JSP 752 or JPA rather than working from a per-mile figure.

Continuity of Education Allowance (CEA)

The MOD scheme for boarding and day school fees is the Continuity of Education Allowance. It exists so that a Service child's education is not broken by the parent being assigned from place to place.

• Both the child and the school must meet the eligibility criteria in JSP 752 chapter 14, and the school is chosen from MOD's Accredited Schools Database.
• There is a minimum parental contribution of 10% for each eligible child. CEA never covers the whole fee.
• MOD publishes maximum rates separately for boarding and day, and for senior and junior school.

Source: MOD Discover My Benefits - Continuity of Education Allowance; GOV.UK, Review of Continuity of Education Allowance concludes ("Parents are also required to contribute a minimum of 10 per cent of the school fees").

Tax treatment is a statutory exemption, in section 297C of the Income Tax (Earnings and Pensions) Act 2003: "No liability to income tax arises in respect of payments of the Continuity of Education Allowance to or in respect of members of the armed forces of the Crown during their employment under the Crown or after their deaths" (ITEPA 2003 s297C). Section 305, sometimes cited for this, is about offshore oil and gas workers' mainland transfers and has nothing to do with it.

Because the published maximum changes, check the current JSP 752 rate for your child's phase rather than working from a figure quoted anywhere else.

Flat rate expense for laundering uniforms

There is a flat rate expense deduction for the cost of laundering uniforms, and it is worth knowing both the amount and the way it is given, because both are commonly misstated.

• Other Ranks in the Army, RAF and Royal Marines: £100 a year. Ratings in the Royal Navy: £80 a year.
• It applies to "Armed Forces Regulars or Reservists on mobilisation or Full Time Reserve Service engagements".
• From 2014/15 onwards "relief will be given under a net pay arrangement operated by MoD". It does not arrive as an addition to your tax code, so there is no separate code to look for and no claim to make.

Source: HMRC, EIM50125 - Tax treatment of armed Forces: Flat Rate Expenses for laundering of uniforms.

Beyond that, armed forces pay "includes pay, pensions and other earnings from service in or with the armed forces of the crown" and "is taxable as employment income" (HMRC, EIM50100).

Local Overseas Allowance (LOA)

LOA is paid to Service personnel assigned overseas to compensate for cost-of-living differences. The exemption that covers an allowance of this kind is section 299 of ITEPA 2003, Crown employees' foreign service allowances: "No liability to income tax arises in respect of an allowance paid to a person in employment under the Crown if it is certified to represent compensation for the extra cost of being obliged to live outside the United Kingdom in order to perform the duties of the employment" (ITEPA 2003 s299). The certificate has to be given by the Treasury or one of the other named office holders in that section: it is a statutory exemption on a certified allowance, not a blanket exemption for anything paid overseas.

Rates vary by assignment location, family circumstances and rank. JSP 752 is the authoritative source for individual entitlement.

Tax code adjustments for Service personnel

Service personnel typically hold standard tax codes:

• 1257L for most regular service.
• Welsh C prefix for Welsh resident personnel.
• Scottish S prefix for Scottish resident personnel.

The uniform flat rate expense is given through MOD's net pay arrangement rather than through the code, so a standard 1257L is what most serving personnel should expect to see.

For personnel assigned overseas, the usual assumption that a long posting takes you out of UK tax does not hold:

• The Statutory Residence Test's automatic UK residence day count is 183 days, not 185: you are automatically UK resident if "you spent 183 or more days in the UK in the tax year" (GOV.UK, tax on foreign income: UK residence).
• More to the point, Crown employment is dealt with separately. Earnings from Crown employment in respect of duties performed outside the UK "are to be taken as being 'subject to United Kingdom tax'" unless an order excepts them (ITEPA 2003 s28). An NT code is therefore not the normal position for a serving member assigned abroad.

How the reliefs interact

A single deployment can put several of these in play at once:

• Operational Allowance for days in a specified operational location.
• LSA for qualifying separation days, including deployment days.
• GYH Travel for journeys home between periods of duty.
• CEA for children's school fees where the family qualifies.

Take a Service person deployed for 180 days, with no prior qualifying separation on record, so they are at LSA Level 1:

• Operational Allowance: 180 x £29.02 = £5,223.60, exempt from income tax under ITEPA 2003 s297A.
• LSA at Level 1: 180 x £9.58 = £1,724.40, taxable.
• Taxable income from the deployment: £1,724.40 above normal pay.
• Income tax not charged on the Operational Allowance: £5,223.60 x 20% = £1,044.72 at basic rate, or £5,223.60 x 40% = £2,089.44 at higher rate.

The LSA figure is the one people get wrong, usually by reading the Level number off the length of the deployment. Six months is 180 days, and 180 days of cumulative qualifying separation is Level 1. Level 9 starts at 1,541 days, which is more than four years of it accumulated over a career. Pricing a single tour at a Level 9 rate overstates the LSA on it by about £4,000.

Self Assessment for Service personnel with side income

Service personnel with non-PAYE income (e.g. property rental, freelance work, side businesses) must file a Self Assessment tax return. For 2025/26:

• Filing deadline: 31 January 2027 (paper 31 October 2026).
• HMRC marries up Service pay (P60) with self-employment / property income.
• Operational Allowance and other tax-free elements do NOT need to be reported on SA - they are non-taxable.

Service personnel benefit from JPA-issued P60 documents at year end which can be used directly for SA purposes.

Resettlement on the way out

The Resettlement Grant is "a one-off lump-sum payment intended to help you adjust to civilian life". Under AFPS 15 you are entitled to it provided you have served for at least 12 years, are not entitled to an EDP, an ill-health award or an immediate pension, have not had one before, and are not a member of the Reserve Forces (MOD, AFPS 15: Your Pension Scheme Explained, section 6).

The conditions under AFPS 75 are different again: officers need at least 9 years from age 21 with at least 2 as an officer, Other Ranks at least 12 years from age 18, and in both cases the member must not also be entitled to an AFPS 75 immediate pension (MOD, AFPS 75: Your Pension Scheme Explained, section 5).

So the grant is not a 22-year reward, and reaching an immediate pension point takes you out of it rather than adding to it. Career Transition Partnership support and resettlement training are separate provisions with their own rules; check JSP 534 and your unit's resettlement staff for those.

Common errors and how to fix

Common errors on Service person tax codes / payslips:

1. Incorrect Operational Allowance tax treatment - payroll mistakenly taxes the allowance. Submit a P800 reconciliation request via GOV.UK.
2. LSA paid at the wrong Level - the Level is set by cumulative qualifying separation, so check the running total on JPA rather than the length of the current detachment.
3. Incorrect Welsh / Scottish prefix - confirm residence on JPA and update HMRC via Personal Tax Account.
4. Tax code change after promotion - standard 1257L should remain unless other circumstances; promotion alone does not change the tax code.

Action checklist

For Service personnel managing their tax position:

1. Track Operational Allowance days carefully - these are exempt from income tax.
2. Check your cumulative qualifying separation total on JPA against the LSA Level you are being paid.
3. Maintain records of GYH Travel claims.
4. Apply for CEA if eligible, and budget for the minimum 10% parental contribution.
5. Set up Personal Tax Account to monitor tax code changes.
6. File Self Assessment if any non-PAYE income.
7. Engage HMRC promptly if any exempt element is incorrectly taxed.

More military pay guides

Start at the UK Armed Forces pay, pensions and payslips hub for the full cluster, or go straight to:

• Army pay scales 2026/27 - the basic pay and supplements these reliefs sit alongside.
• Royal Navy pay 2026/27 - sea-service pay, where qualifying separation accumulates fastest.
• McCloud remedy deep dive - the pension remedy and its own tax compensation provisions.

Disclaimer

PayslipIQ provides automated educational guidance based on the figures you supply. It is not regulated tax or financial advice. Service personnel tax reliefs are administered by HMRC and MOD jointly; individual eligibility depends on rank, posting, family circumstances and deployment record - for substantial tax queries, consult Forces Pension Society, your Unit HR or a regulated CTA-qualified tax adviser experienced with Armed Forces personnel.