What is Local Overseas Allowance (UK)?

Introduction

Local Overseas Allowance (LOA) is intended to contribute towards the additional local cost of day-to-day living when UK Service personnel are required to serve overseas on:

  • Permanent assignment;
  • Temporary duty; or
  • Exercise.

Is LOA Changing?

  • Yes.
  • On 01 July 2021, the way that LOA is calculated was changed.

Why Change?

  • The changes will make the allowance more transparent, fairer to all service personnel, and improve oversight.
  • They do not impact eligibility or other allowances and are not a saving measure but designed to be cost neutral.
  • The changes are the result of a thorough review of the current methodology, in place since 1981, which has taken more than three years to complete.
  • The new methodology is based on commercially available data used by multinational corporations as well as the Foreign, Commonwealth and Development Office (FCDO), and is needs-based.

The Changes in Brief

  • One of the most significant changes was the introduction of a single band for all Service personnel regardless of rank, removing the previous rank-based banding system.
  • The elements of the old LOA rate that related to support for an overseas private vehicle and respite (travel and accommodation) costs, have been broken out of the LOA daily rates.
    • These two provisions can now be claimed when Service personnel incur the costs, rather than being included in the daily rate, and will be accessible only to Service personnel on permanent assignments overseas.
    • Both are discussed in further detail below.
  • The changes that have been made mean that some Service personnel around the world will see an increase in the value of their LOA package, while for others it will remain broadly the same or decrease.

Who is Eligible for LOA?

  • Eligibility for LOA remains the same.
  • It will continue to be paid to Service personnel who are assigned overseas on permanent or temporary duty, seagoing or exercise.
  • It will not be applied to Defence Attachés and their support staff.
    • Instead these cohorts will remain on Cost of Living Addition (COLA) to maintain parity with existing FCDO arrangements.

What about Transition for Changing Rates?

  • Rates were released on 11 June 2021.
    • They are not in the public domain and personnel should contact their Unit HR department for advice in the first instance.
  • All Service personnel receiving LOA on 30 June 2021 automatically transferred to the new LOA package on 01 July 2021.
  • Any locations that see a significant change in the daily rate of LOA will have their rates changed gradually over a period of up to three years (01 July 2021 to 01 July 2024).
    • This transition is based on a (maximum) 25% of the difference between the existing and future rate each year.
    • This will ensure that service personnel do not experience a single significant shift in the rate during the transition period.
    • All increases in rates took immediate full effect on 01 July 2021.
  • The Overseas Private Vehicle Provision became available from 01 April 2021.

What Components Make Up the LOA Package?

  • All service personnel who are eligible for LOA will receive a daily rate based on where they are serving overseas, which is paid alongside monthly salaries.
  • The daily rate (DR) is comprised of three separate elements that address different types of additional costs related to living overseas.
    • Cost of Living (CoL): This element determines the difference in the cost of living between the UK and the overseas location
    • Environmental Factor (EF): This reflects the lived experience overseas in comparison with that in the UK
    • Location Factor (LF): This is a contribution towards additional expenses such as legally required items, banking charges and other necessary costs that are specific to the overseas location.
  • These three elements inform the LOA DR, which together with the additional contributions (AC) of the Overseas Private Vehicle Provision (OPVP) and Respite Provision (RP) form the new LOA package.
    • Each AC is paid as a lump sum upon proof of expenditure.

New LOA Package = DR (CoL + EF + LF) + (OPVP + RP)

  • Distinctions will continue to be made for unaccompanied and accompanied service personnel.
  • To further support those service personnel with accompanying children, the child rate will be set to the maximum allowed by independent data.

What about Split Net Pay?

  • When the new LOA package was first announced on 01 February 2021, the policy included the cessation of Split Net Pay as a routine mechanism to transfer a portion of service personnel pay and allowances into an overseas bank account.
  • Noting various factors such as the impact of Brexit on bank charges and transfers as well as the current international economic climate, the policy regarding Split Net Pay was reversed.
  • The new LOA package will have no impact on access to the Split Net Pay facility which will continue to be made available to service personnel in receipt of LOA.

What is the Overseas Private Vehicle Provision?

  • Overseas Private Vehicle Provision (OPVP) was introduced as part of the changes to LOA which took effect from 01 July 2021 (although OPVP was available from 01 April 2021).
  • What is OPVP?
    • OPVP will help families on overseas postings with the cost of accessing a private vehicle in an overseas location.
    • Depending on the circumstances, it can be claimed on assignment both into and out of the overseas location.
  • What Does It Replace?
    • Previously there were two schemes which assisted Service personnel with the cost of a private vehicle when they are assigned overseas:
    • Shipping vehicles to qualifying locations in receipt of Small Station LOA (SSLOA)
    • A car buy/sell (CBS) allowance paid as part of the daily rate of Main Station LOA (MSLOA) to most MSLOA locations.
    • These have changed and both schemes have been replaced with OPVP as part of the changes to LOA.
  • What Can It Be Used For?
    • To contribute towards administrative and vehicle depreciation costs when selling and buying a vehicle.
      • The Service person must be able to demonstrate that two separate financial transactions have taken place.
      • This will be called Overseas Private Vehicle Provision – Selling/Buying (OPVP(S/B)); or
    • To contribute towards the charges incurred when required to cancel a vehicle lease agreement.
      • This will be called Overseas Private Vehicle Provision – Cancelling Vehicle Lease (OPVP(CVL)); or
    • To contribute towards the cost of privately shipping one vehicle to and from the permanent overseas assignment location.
      • This will be called Overseas Private Vehicle Provision – Shipping (OPVP(S)).
      • Up to a capped rate.
  • Rates?
    • The current rate is set at £1,025 as of April 2022 and will be reviewed on an annual basis.
  • What If the Service Person wishes to drive?
    • Service personnel have the option to drive their personal vehicle to eligible countries (Germany, France, Belgium, Denmark, Luxembourg and the Netherlands) and claim Motor Mileage Allowance (MMA) and one day’s subsistence as a contribution towards this journey.
    • From 01 April, Italy, Spain, Portugal and Gibraltar where also added to this list.
  • What If We Have Two Cars?
    • There has also been an introduction of a greater rate of LOA which will be available to accompanied Service personnel who can demonstrate that they are running two private vehicles at the overseas location, with effect from 01 July 2021.
  • What about Transition Arrangements?
    • Transitionary arrangements have been made for Service personnel that were in receipt of the CBS element of MSLOA, on the old system.
    • This is because it is recognised that, as at 01 July 2021, those serving at these locations will have received different amounts of financial contribution depending on the length of time they have been assigned to the location.
    • For more information on OPVP and the transitionary arrangements read the Directed Letter below.

Further details can be found in JSP 752 – Tri-Service Regulations for Expenses and Allowances, Chapter 9, Section 4.

What is the Respite Provision?

  • Respite Provision (RP) was introduced as part of the changes to LOA which took effect from 01 July 2021.
  • What is RP?
    • RP is a contribution towards accommodation and travel costs to allow the serving person and their family to have a short respite break away from the duty station overseas.
    • RP replaces the Short Break Accommodation Package in Main Station LOA, commonly referred to as ‘Bett Nights’.
  • Who Can Claim It?
    • It is available to all service personnel and their immediate family members who are permanently assigned overseas and when in receipt of permanent rates of LOA.
    • If a Service person is claiming School Children’s Visits (SCVs) for a child, then they will not be able to claim RP for that child.
  • How Much Can Be Claimed?
    • Each overseas location that the Service person is assigned to is given a set number of claimable Respite days per person, per year (This varies by location).
    • There is a maximum claimable rate per day, per person (This varies by location).
    • Depending on the conditions in, and isolated nature of, a location, the annual contribution will range between four and nine days respite.
    • Personnel can find the number of days and claimable rate per day in JSP 752 – Chapter 3: Rates.
  • What about Respite Journeys (Remote Locations)?
    • RP also replaces Respite Journeys (Remote Locations) which ceased as of 30 June 2021 for those in receipt of LOA.
    • There were no transitional arrangements for the Respite provision.
  • What Can Personnel Claim For?
    • Can claim for accommodation but not food and drink.
    • Can claim travel costs for travel to and from the Respite destination.
    • Respite days can be taken in one block of days or individual days up to the maximum entitlement for that country.
    • Not able to use RP when using the Get You Home Overseas allowance or with any other travel entitlement.
      • For service personnel serving in North West Europe (France, Belgium, Netherlands and Germany), the Get You Home (Overseas) allowance reduced from three journeys per year to one journey per year following the universal introduction of the Respite provision.
  • How To Claim?
    • Respite costs are retrospectively claimed through the JPA Expenses Claim system.
    • Personnel will need to keep all their receipts and claim no later than 14 days after the break.
    • Personnel may be able to get an advance of pay of up to 80% of their maximum claim rate.

Further details can be found in JSP 752 – Tri-Service Regulations for Expenses and Allowances, Chapter 9, Section 5.

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