Guaranteed Income Payment (GIP) explained

What the GIP is for

An AFCS award has two parts. The tax-free lump sum, set by the tariff level, compensates for the injury or illness itself. The Guaranteed Income Payment compensates something different: the earning capacity you have lost because of it. That is why it is paid as a monthly income for life rather than as a one-off, and why it is only paid where the injury is serious enough to affect a career.

It is tax-free, and it is index-linked, so it rises each April in line with prices in the same way the War Pension rates do. It is paid in addition to the lump sum, not instead of it.

Tax-free does not mean it is ignored for benefits. Universal Credit ignores a GIP in full, but Pension Credit ignores only £10 a week of it and counts the rest as income. Our guide to AFCS and means-tested benefits goes through each benefit. MPs pressed for this to change in the 28 October 2026 Budget, but Budget 2026 made no change to how a GIP is counted.

Because it is compensation rather than a pension, a GIP cannot be divided on divorce. It is outside the pension sharing rules, and any assignment of an AFCS award is void under the scheme order, so no sharing, attachment or earmarking order can reach it. A court can still count the income as a financial resource when it weighs an offsetting settlement. Our armed forces pension on divorce guide explains which armed forces benefits can and cannot be split.

Which tariff levels pay a GIP

GIP is paid on tariff levels 1 to 11. Levels 12 to 15, which cover the less severe injuries on the fifteen-level scale, receive the tax-free lump sum only and no ongoing income.

That cut-off is the single most important thing to understand about an AFCS award, because it is the difference between a one-off payment and a lifetime income. On the April 2026 tariff, level 11 pays a lump sum of 16,572 pounds plus a GIP, while level 12 pays 10,691 pounds and nothing further. The gap in lifetime value between those two levels is far larger than the gap in the lump sums suggests.

The four percentage bands

The GIP is calculated as a percentage of your final salary at discharge, and the percentage is set by your tariff level. There are four bands. Levels 1 to 4 attract 100% of final salary. Levels 5 and 6 attract 75%. Levels 7 and 8 attract 50%. Levels 9 to 11 attract 30%.

Those percentages are the starting point, not the final answer. They are applied to your salary and then adjusted by an age factor, described below, so the monthly figure that lands is specific to you.

Most GIPs sit in the lowest band. On 31 March 2026, 5,443 veterans were receiving a GIP, and 3,415 of them (nearly two in three) were in the 30% band, according to MOD's AFCS statistics for 2025/26.

Why the age factor changes everything

After the band is applied, an age factor adjusts the payment according to how old you were at discharge. The logic is that a younger member has lost more future earning years, so the same injury represents a greater lifetime loss and the monthly payment is higher.

This is why two people with an identical tariff level and an identical salary can receive noticeably different GIPs. It also means any figure you see quoted as a fixed monthly amount for a given tariff level should be treated with suspicion. The band is fixed, the individual amount is not. For your own figure, Veterans UK is the only reliable source.

How a medical discharge pension is offset

If you were medically discharged and receive an AFPS ill-health pension, that pension interacts with the GIP rather than simply stacking on top of it. Where the pension relates to the same condition as the AFCS award, it is offset in full against the GIP, so you do not receive both for the same loss. Where it relates to a different condition, the offset is partial.

This catches people out, because the total is often less than adding the two figures together suggests. Our medical discharge guide covers the AFPS side, and the medical discharge pension calculator will estimate the pension element. The AFCS award itself is not affected by the pension; it is the GIP payment that is adjusted.

GIP and Armed Forces Independence Payment

A GIP set at 50% or more, which means a tariff level between 1 and 8, lets you claim Armed Forces Independence Payment. AFIP is paid instead of Personal Independence Payment, and because it follows from your GIP band there is no separate PIP-style assessment. You do still have to claim it, and you cannot be getting PIP or another extra-costs disability benefit, or have a claim or appeal for one outstanding.

AFIP is paid at £194.60 a week from 6 April 2026. Be aware that the published guidance on this has fallen behind: the main government page still shows £172.75, which was the April 2023 rate. The current figure is set by the April 2026 amendment to the compensation scheme, and it is the one that should be reaching your bank account.

Veterans UK sends the AFIP claim form automatically to people whose GIP is in Band A to C, so if your award sits at tariff 8 or above and no form has arrived, it is worth checking rather than assuming AFIP is in place. Our Armed Forces Independence Payment page covers the rules in full.