Defence Secretary Gavin Williamson has launched a review to protect armed forces personnel based in Scotland paying higher taxes than those stationed elsewhere in the UK.
Around 8,000 members of the armed forces are set to be affected by the change after the Scottish Government brought in new income tax bands and increased tax levels.
Mr Williamson said: “The SNP’s tax hike unfairly hits 70% of our brave and loyal service personnel based in Scotland, leaving thousands of them out of pocket. This is wrong.”
“I am working to ensure that those who are affected do not feel they are being punished by serving in Scotland.”
Last month’s budget changes will see higher earners pay more and lower earners pay less.
Analysis says that those earning more than £26,000 will pay more tax in comparison with their counterparts in the rest of the UK.
In the armed forces it is thought a staff sergeant would pay an extra £117 a year in Scotland.
An army major would pay an extra £660 while a lieutenant colonel would pay £863 extra. A full colonel would have to pay an extra £1,013.
“Our servicemen and women make a huge contribution to the communities and the economy of Scotland,” said Scotland Secretary David Mundell.
“The Scottish Government’s decision to make Scotland the most highly taxed part of the UK means they would be penalised for being stationed here.”
Hundreds of extra service personnel in the British Army, Royal Navy and Royal Air Force are due to move to Scotland in the coming years, with many in the armed forces not able to decide where they are posted.
Tory MP for Angus – Kirstene Hair, who has raised the issue at Prime Minister’s Questions, said: “Yet again the UK Government is having to clear up the SNP’s mess. This hike in taxation is unwanted and unnecessary.”
“It’s clear the SNP has no respect for military staff, and no respect for people who work hard to do their best for their family.”
I raised this in December when it became clear the SNP punitive tax rises would cause many Scottish service personnel to pay more tax than their counterparts from the rest of the UK. Pity that yet again @Conservatives are having to clean up the SNPs messhttps://t.co/TdcwNFz8hl
— Andrew Bowie MP (@AndrewBowieMP) March 12, 2018
A Scottish Government spokesman said:
“Keith Brown, Cabinet Secretary for the Economy, Jobs and Fair Work, wrote to the Defence Secretary in February with an offer to consider constructive proposals by the UK Government to address the differential taxation of military personnel.
“He was clear that any proposals must respect the Scottish Government’s income tax policy, and in particular should not disadvantage those earning under £26,000 who will pay less under our income tax proposals than they would under tax rates applicable in the rest of the UK.
“It is disappointing that no response has yet been received.”