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Armed Forces: Pay

Volume 474: debated on Monday 31 March 2008

To ask the Secretary of State for Defence whether the commitment bonus is (a) tax free, (b) tax free while serving in an area which qualifies for the operational allowance, (c) paid in full with one lump sum and (d) paid incrementally over a period of time. (196601)

The commitment bonus is paid to service personnel below officer level and is subject to income tax and national insurance contributions. This applies irrespective of where an individual is serving at the time that payment is made.

Currently, the commitment bonus is paid as a single lump sum of £5,500 or in two stages which, if an individual qualifies for both, total £5,500. Under the revised arrangements to be introduced next year, announced in my written ministerial statement on 19 March 2008, Official Report, columns 65-66WS, payments will range between £3,750 and £15,000 which can be claimed as a lump sum at different lengths of service from four (or five) to eight years, with higher payments the longer the individual has served. Those who take a payment before eight years, but then give additional service, will be allowed to take a second payment, but the overall amount received will be reduced to reflect the decision to take part of the payment early, thus providing the incentive to wait and take a larger sum later.