Income Tax (Earnings and Pensions) Act 2003 section 639

Pensions in respect of death due to military or war service

Section 639 exempts from income tax certain pensions and allowances paid in connection with death due to military service, wartime merchant navy service, or war injuries.

• Pensions or allowances paid by or on behalf of the Ministry of Defence under specified regulations, relating to death due to armed forces service, wartime merchant navy service, or war injuries, are fully exempt from income tax.
• Pensions paid by the Ministry of Defence for death resulting from peacetime armed forces service before 3 September 1939 are also exempt, provided they are paid at rates and on conditions similar to those applying to wartime or war injury pensions.
• Equivalent pensions paid under the law of a country other than the United Kingdom are likewise exempt, as long as they are substantially similar in character to the UK pensions described above.
• The list of qualifying regulations and schemes can be updated by Treasury order, meaning the exemption can be extended to cover new or replacement pension schemes without requiring a change to primary legislation.