Guaranteed Income Payment (GIP) explained
The Guaranteed Income Payment is the second half of an Armed Forces Compensation Scheme award. Where the tax-free lump sum compensates pain and suffering, the GIP compensates the earnings you can no longer expect to make. It is a tax-free, index-linked monthly income paid for life, and it is only awarded at the more serious tariff levels. This page explains who gets one, how the band is set, and why two people at the same tariff level can receive very different amounts.
Key takeaways
- GIP is paid on tariff levels 1 to 11 only; levels 12 to 15 receive a lump sum alone.
- It is tax-free, index-linked and paid for life, on top of the lump sum.
- The band is a percentage of final salary: 100% at levels 1 to 4, 75% at 5 to 6, 50% at 7 to 8 and 30% at 9 to 11.
- An age factor then applies, so a younger member gets more, because more earning years are lost.
- A GIP of 50% or more triggers automatic entitlement to Armed Forces Independence Payment.
- A medical discharge pension for the same condition is offset in full against the GIP.
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.
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.
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, brings automatic entitlement to Armed Forces Independence Payment. AFIP replaces Personal Independence Payment for those who qualify, and because entitlement is automatic there is no separate assessment to go through.
That automatic route is a meaningful advantage over the standard benefits process, so if your award sits at tariff 8 or above it is worth checking that AFIP has actually been put in place rather than assuming it happened.
Frequently asked questions
James Hartley
James Hartley spent 22 years in the British Army, including unit personnel administration and pensions and records duties, and now writes the scheme guides and scenario pages on this site. He is not a regulated financial adviser, so the content is general information rather than personal advice.
Sources: gov.uk · GAD factors · Veterans UK · Forces Pension Society · MoneyHelper.