National Insurance Credits for Service spouses and civil partners
Jobseeker's Allowance for spouses/civil partners of Service personnel returning from overseas assignment
National Insurance contributions: effect on State Pension
Army families can avoid excess mortgage fees if they own a home and are forced to rent it out due to postings
Can you claim Marriage Allowance?
Brexit and your overseas posting
Changes to lettings legislation
Car insurers offer better deal for Armed Forces personnel
Government help to buy ISA
Entitlement to claim Jobseekers Allowance (JSA) for spouses and adult children of Service personnel
Armed Forces Pension Scheme 2015
Forces Help to Buy (FHTB) scheme
Mortgage barriers for Armed Forces families
MOD Ex-Gratia Payment in lieu of Maternity Allowance
Financial top tips for Service personnel
Sure Start Maternity Grant - Overseas Applications
Moving back to the UK? Think about your finances
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. Read more
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 Norther 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 GOV.uk. 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.
Jobseeker's Allowance for spouses/civil partners of Service personnel returning from overseas assignment
If your family is returning from overseas, find out about ensuring you are not disadvantaged when claiming Jobseeker's Allowance (JSA), thanks to the Armed Forces Covenant. Click here to read more.
AFF is aware of a current petition regarding changes to the National Insurance (NI) contributions Forces’ personnel make. Read more
As of April 2016, both a new, enhanced flat rate State Pension and the abolition of lower rate, contracted-out National Insurance (NI) contributions – including those paid as part of the Armed Forces Pension Scheme (AFPS) - came into effect.
While there has always been a link between NI contributions and pension entitlement, the two separate announcements did not make clear the significant effect this link would have.
As well as Regular soldiers, the change affects voluntary Reservists who moved on to the AFPS15 scheme in April 15, who will have paid the lower rate of NI until April 2016.
Impact on pension
As a result of this change, those who previously paid lower rate (Cat D) NI contributions will not receive the full State Pension unless they have paid the new rate for at least 10 years at State Pension age, due to a reduction applied to the sum available, to remove the benefit that reduced NI contributions previously offered.
The Forces Pension Society has released a statement to say they do not support the petition, and Royal British Legion agree. Read the full statement here.
Find out more
If you are concerned about the effect this change has had on your state pension, please contact Laura Lewin, AFF’s Money & Allowances Specialist at firstname.lastname@example.org
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. Read more.
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 Employment, Training, Allowances and Money Specialist Laura Lewin at email@example.com
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. Read more.
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 www.gov.uk/marriage-allowance.
Are you posted overseas and have concerns about Local Overseas Allowance (LOA) and exchange rates as a result of Brexit? Read more.
The purpose of the allowance is to contribute to the difference between the cost of living in the UK and your overseas location. The Defence Business Service (DBS) and the Pay Colonel’s staff calculate LOA rates during overseas visits; the rates are regularly reviewed, meaning you should not be out of pocket because of your posting.
DBS track the value of the pound to see if a change to the Forces Fixed Rate (FFR) of exchange is necessary; any changes are published on the first of each month. If the FFR is reduced, the LOA you receive will increase, as more Sterling is needed to buy the same goods than before. However, if the FFR is increased, the LOA you receive will reduce, as less Sterling is needed to buy the same goods than before.
For further queries about allowances or money, contact our Specialist Laura Lewin at firstname.lastname@example.org.
Do you own a property and let it out? If so, changes to tax regulations were implemented in April 2017 that may affect you. Read more.
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 lobbying 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.
AFF is delighted with the news of an agreement from the Association of British Insurers (ABI) and the British Insurance Brokers Association (BIBA). After much campaigning, Armed Forces families will now keep their no claims bonus for up to three years and save on cancellation fees if you need to cancel at short notice due to an overseas posting. Read more.
Previously, the maximum any insurance company would honour no claims discounts for families posted overseas was two years, meaning families could lose out on discounts that most people take for granted.
Losing their no claims discount left soldiers’ families posted overseas severely out of pocket, paying the full motor insurance as though they had just started driving.
AFF highlighted this disadvantage and it was discussed recently at Downing Street, when financial services representatives, and ministers, addressed a range of measures to help recognise the specific needs of Armed Forces families.
A commitment has now been made by the majority of insurance companies that will give flexibility and make insurance fairer for Armed Forces personnel posted overseas.
If you are likely to be posted abroad or know someone who is, you should…
- Check your insurance policy
- Contact your insurer or broker directly
- Provide your insurer with a letter from your soldier’s commanding officer
For further information, and to find out which insurance companies have signed up to the agreement, click here.
If you are having difficulties with car insurance following an overseas posting, please contact Laura at etam@.aff.org.uk.
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. Read more.
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 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 email@example.com
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.
Update Feb 2014: 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.
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. Read more.
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.
Previous residence rules exempted Service spouses and adult children returning from overseas to claiming Jobseekers allowance for three-month residence requirement. Read more.
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.
Did you know that, since the new Armed Forces Pension Scheme 2015 (AFPS 15) was introduced, it now takes up to 30 working days from the day of your soldier’s discharge for all pension and compensation payments to be processed? Read more.
If your soldier has recently discharged from the Army you may be concerned that their pension, lump sums and any compensation payments are not being processed in the time you expected; this could impact on rent deposits or other costs associated with your move to civvy-street.
All Service personnel who are members of an Armed Forces pension scheme, and who will be serving beyond April 2015, will be automatically transferred to AFPS 15 unless they qualify for transitional protection i.e. were within ten years of the normal pension age for their respective scheme on 1 April 2012.
For more information on AFPS 15, click here.
Tell AFF your view
Is the new increased 30-day payment process affecting you? Do you feel the timeframe should be returned to the 10-20 days it previously was? AFF wants to hear your views and experiences - contact us at firstname.lastname@example.org
The Forces Help to Buy (FHTB) scheme is an advance of salary scheme, which is available to help Service personnel who want to buy their first home and to enable the option to self-build amongst eligible Service personnel. Read more
Since 2014, Regular Service personnel have been able to take an advance of up to 50% of their gross annual salary (capped at £25,000), interest free, to purchase their own home.
The scheme aims to address low levels of home ownership in the Armed Forces, overcoming the disadvantages that mobility brings in line with the principles of the Armed Forces Covenant. It supports greater lifestyle choice and retention of personnel.
The pilot was initially planned to run for three years, but due to its popularity it has now been extended until 2018. AFF is currently seeking clarification on what will happen to the popular scheme at the end of the pilot and will communicate to families when we know more.
The loan is repaid through the Service Person’s monthly salary, over a period of 10 years. You will be expected to live in the home whenever Service needs allow. It is taxable and soldiers should seek advice on the impact this will have on their monthly income.
Currently, payments have been made to over 13,000 applicants, totalling around £197 million, an average of approximately £15,100 per claim.
For more information, please read the full government guidance here www.gov.uk/guidance/forces-help-to-buy. Further information can be found in JSP 464 Chapter 12.
If you have any questions, comments or further suggestions, then please contact AFF Allowances and Money Specialist at email@example.com or 07799 045 955.Back to top
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. Read more.
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
If you are accompanying your spouse/civil partner overseas and fall pregnant, you may be entitled to an Ex-Gratia Payment in lieu of Maternity Allowance if you are prevented from claiming the normal Maternity Allowance. The MOD Ex-Gratia Payment in lieu of Maternity Allowance policy applies to eligible spouse/civil partners who accompany their Service spouses overseas to countries outside the EEA and where there is no reciprocal benefit agreement. Read more.
The Department for Work and Pensions restricts payment of UK Maternity Allowance to those who are living, and have worked, in the UK. If you do not meet the criteria for UK Maternity Allowance because you are not resident in the UK at the time of application, or your qualifying work was undertaken within the EEA, or in a country where there is a reciprocal benefit agreement, your claim will be dealt with by that country. However, if you lived and/or worked in a country outside the EEC and one without a reciprocal agreement, the MOD may consider the payment of an ex-gratia payment in lieu of Maternity Allowance. There is no automatic entitlement and payment is at the discretion of the MOD, however the intent is to consider such requests favourably.
In all cases, regardless of where you live or have worked, the first application for Maternity Allowance should always be made to the Department for Works and Pensions. They will determine your entitlement to Maternity Allowance and will notify you how to proceed. If you receive notification that you may be entitled to an ex gratia payment from the MOD, you will need to claim via your spouse/civil partner's Unit HR staff. Defence Information Note 2015DIN01-171 provides further guidance on how to do this; this is available to serving personnel and Unit Admin staff on the Defence Intranet.Back to top
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. Read more.
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 Laura Lewin at firstname.lastname@example.org.
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. Read more.
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’
Tel: 0845 6036 967Back to top
If you are moving back to the UK after a stint overseas, it is a good idea to consider the implicationson your finances. Read more.
- 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.
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.
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