FINANCIAL ASSISTANCE FOR RESERVISTS - AWARDS (RESERVISTS AWARDS (RA), ADDITIONAL ALLOWABLE EXPENSES (AAE) CLAIMS)

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1 FINANCIAL ASSISTANCE FOR RESERVISTS - AWARDS (RESERVISTS AWARDS (RA), ADDITIONAL ALLOWABLE EXPENSES (AAE) CLAIMS) RA is a taxable payment that is designed to make good any loss in earnings and/or company benefits arising from mobilised service. If your military salary exceeds your previous income then you will not be entitled to receive a Reservists Award. Full details of the scheme can be found on the following website: AEC provides for you to make a claim for recompense of certain additional expenditure that you might incur as a direct result of entering mobilised service. Any claim will have to be supported by evidence of the additional expenditure and in some circumstances will be dependent upon the production of receipts for that expenditure. Entitlement to a claim for AEC is not dependent upon having an entitlement to RA. Parliament has imposed ceilings, in Statutory Instrument Number 859 Defence of 2005, on the maximum payment (military salary plus RA) to be made according to certain criteria. These ceilings, which include the combined earnings and benefits, as described in Paragraphs 15 and 16 below, are as follows: For accredited medical consultants/gmp/gdp whose relevant service is within the Defence Medical Services as a medical consultant/gmp/gdp: 822 per day. For all other reservists: 548 per day. The scheme will be explained to you in more detail at the Mobilisation Centre where you will have the opportunity to submit a claim. It is essential that you bring with you to the Mobilisation Centre proof of all civilian earnings, reservists pay and company benefits (as outlined below) received for the previous 52 weeks and/or financial year, plus proof of earnings for the current year and evidence of any pay award that you have been granted for future implementation. Self employed individuals must bring evidence of their personal income received from their business activities. You should also bring evidence to support any additional financial commitments that have commenced as a direct result of your having been Called-Out for mobilised service. Previous Earnings. Civilian Earnings. These include salary, wages (including overtime), fees, drawings, bonuses, commission of a recurring nature, and/or profit share arrangements. You will require evidence in the form of your P60 for the previous year, and pay statements and other relevant evidence for the current year, ie. Proof of Earnings for the past 52 weeks or more. If you are in partnership or are self employed, you must produce certified accounts for the last 3 trading years. In addition, a letter from a chartered accountant confirming that the business is bone-fide and giving your expected income over the coming 12 months. All evidence must be originals photocopies will not be accepted for Adjudication. The Adjudication Officer will also conduct scrutiny of payments made to spouses from the turnover of Private Limited Companies (these payments will not be factored into any Reservist Award). Turnover of Limited Companies are not deemed to be earnings and the Adjudication Officer will verify the actual

2 amounts paid from the Company as salary. Dividends in lieu of salary will also come under close scrutiny. Reservists will need to bring a letter from their HR Department confirming what salary has been stopped including benefits for the duration of the mobilisation Reserve Pay. Evidence of any reserve pay received during the previous 52 weeks, in the form of a P60 or all Reservist pay statements for the current year, will be required to support any claim. Non-Admissible Income. The following are not admissible for inclusion in any claim for RA: Any allowance or grant payable to the reservist in connection with his service as a member of the armed forces. Any sums paid or payable by way of bounty to the Reservist in respect of his undertaking prescribed training as a reservist and attaining a prescribed standard of efficiency. Any payments made for the benefit of the Reservist, his spouse or partner, or dependants for accommodation or educational fees, or premiums in relation to pension schemes, health or medical insurance or life assurance (see para 6). The value of any payments in respect of any motor vehicle provided by the Reservist s employer and available for the private use by him, his spouse or partner, or dependants (see para 6). Company Benefits. You will be required to produce details of the company benefits shown below, which may be claimed within the overall ceilings of a RA, but only if they are withdrawn by your employer for your period of mobilisation and are re-provided by you. (Documentary evidence will be required to support your claim): Payments for health or medical insurance available for the benefit of the reservist, his spouse or partner or any dependants where: That insurance was immediately before the relevant date paid for by the Where the employer has ceased or will cease to pay for such a benefit as a result of the relevant service of the reservist. Payments for life insurance in respect of the Reservist where: That insurance was immediately before the relevant date paid for by the Where the employer has ceased or will cease to pay for such a benefit as a result of the relevant service of the Reservist.

3 Any additional payments for the accommodation of the reservist, his spouse or partner or any dependants where: Such accommodation was immediately before the relevant date paid for in whole or in part by the The employer has ceased or will cease to make such payments as a result of the relevant service of the Reservist. Any additional payments for the educational fees for any dependent child where: Such fees were immediately before the relevant date paid for in whole or in part by the The employer has ceased or will cease to pay such fees as a result of the relevant service of the Reservist. Where immediately before the relevant date the Reservist had the use of a company car that was also at the disposal of his spouse, partner or any dependants, and: Where such a company car will no longer be at the disposal of the Reservist s spouse, partner or any dependants as a result of the relevant service of the Reservist and; Where no other car is available to the Reservist s spouse, partner or any dependants for their use. This is payable at a fixed rate of per day. Payments made by the Reservist in respect of such other benefits that the reservist received from the employer where: Such a benefit was immediately before the relevant date paid for by the The employer has ceased or will cease to pay such a benefit as a result of the relevant service of the Reservist. Additional Allowable Expenses (AAE) Claims. Allowable expenses means those expenses specified below which are incurred by the reservist as a result of his relevant service and which will cease at the end of the relevant period. Those allowable expenses are: Additional payments by the Reservist in respect of the care of a dependent child. Additional payments made by the reservist in respect of the care of any dependent relative who is ordinarily resident with the Reservist. Additional payments by the Reservist in respect of the care of an animal for which the Reservist is responsible, but does not include:

4 Any veterinary bills that would have been incurred in any event had the Reservist not been performing relevant service, or The care of animals that are the subject of a commercial activity of the Reservist which forms the basis of his livelihood. Additional payments made by the Reservist in respect of insurance for leaving his main residence unoccupied for an extended period of time. Payments made by the Reservist in respect of the essential maintenance of his main residence and garden. A claim under this regulation may be for allowable expenses which have been, or will be, paid. In the case of an allowable expense which will be paid, an adjudication officer may agree to make monthly payments subject to evidence being provided subsequently that the amounts have been paid by the Reservist. Supporting Evidence. Recognising that each situation will differ significantly it is essential that reservists expectations are not raised prior to attending the Mobilisation Centre and each case will be judged on its merits by the Adjudication Officers. It should be clear that the award of Allowable Expenses will be under close scrutiny and that simply requesting a specific area will not naturally lead to instant acceptance. The onus lies with the Reservist to prove that the expenditure is necessary and that it is solely as a result of the period of mobilisation. Tax Efficiencies. Some Reservists will be making use of tax efficiencies whereby they elect to pay a minimum salary equating to the tax thresholds for no payment of tax and draw the remainder of salary by way of Company Dividends. In a case whereby the Reservists fulfils the role of Employee, Employer and shareholder the AO must consider the ability for the Company to continue in operation during the period of mobilised service and thereby be in a position to declare dividends. In simple terms, a Reservist will not be able to request a Reservist Award for lost income if the civilian income could have been paid but for the decision taken by the Reservist (in any of the positions he undertakes, namely Employee, Employer or Shareholder). Guide to Reservists and Adjudication Officers on Additional Allowable Expense Claims. Reservists are to note the guidance given in the table below and Frequently Asked Questions (below). Documentary Evidence. Documentary evidence is required to support all of the above before a claim can be authorised. An Adjudication Officer may, however, authorise the payment of an interim award pending receipt of the necessary evidence if he/she is satisfied that such evidence will be forthcoming. Significant Civilian Pay Increases. If you have been awarded an increase that would have come into effect during your period of mobiised service, you must bring documentary evidence with you and submit it with your claim. Failure to provide proof of

5 earnings and/or benefits will delay a final decision on your entitlement or delay payment of your full entitlement while proof of full earnings is awaited. Time limits for making a claim. A claim under these Regulations may not be made before the date of mobilisation. A claim for a Reservists Award shall not be made more than 4 weeks after the end of the relevant period of mobilised service unless an adjudication officer agrees to an extended period. Tax. You must bring evidence of your current Tax Code with you to the Mobilisation Centre. This should be shown on your P60 or current civilian pay statement. The staff can then ensure that your Tax Code for your period of mobilisation is adjusted correctly. You will however be required to complete an IR Form P46 to inform the Inland Revenue that you are entering full time service and if you fail to bring evidence of your current Tax Code, the MOD will be obliged to apply the Emergency Tax Code. This may mean you will initially pay tax at a higher rate than necessary. Recovery of any overpayment of tax will be your own personal responsibility.