Income Tax (Earnings and Pensions) Act 2003 section 640A

Lump sums provided under armed forces early departure scheme

Section 640A exempts from income tax any lump sum paid under the armed forces early departure payments scheme.

• Lump sums paid under the Armed Forces Early Departure Payments Scheme Order 2005 are fully exempt from income tax
• Lump sums paid under the Armed Forces Early Departure Payments Scheme Regulations 2014 are also fully exempt
• The exemption applies to the lump sum element only, as provided under these specific statutory instruments
• No income tax liability arises on these payments, so they do not need to be included in taxable income calculations