What Is Local Overseas Allowance (LOA)?

Local Overseas Allowance (LOA) is designed to help cover your day-to-day expenses in certain overseas locations where the cost of living is higher than in the UK.

It is not a bonus, a reward for service, or extra pay in the conventional sense. It is a contribution towards the additional costs you genuinely face when posted abroad, covering things like food, utilities, and general living expenditure that cost more than they would back home.

The aim of LOA is to contribute towards the necessary additional local cost of day-to-day living when Service personnel are required to serve overseas, either on a permanent, temporary, exercise, seagoing, or, if applicable, operational basis.

That covers a wide range of postings, from a permanent assignment in Germany to a short exercise in Cyprus.

LOA is still paid automatically alongside the monthly salary and continues to contribute towards the additional local cost of day-to-day living when service personnel are required to serve overseas.

You do not need to submit a separate claim for the daily rate itself. Your Unit HR or Personnel Office handles it.

Is LOA Taxable?

This is one of the most searched questions on the topic, and the answer matters when you are budgeting.

LOA is a non-taxable allowance which recognises the amount by which average essential expenditure on living in a particular overseas location differs from that in the UK, where appropriate taking into account differences in the local lifestyle.

Operational Allowance (OA), Local Overseas Allowance (LOA), Get You Home (GYH) and Home to Duty (HTD) are not taxed.

This makes LOA meaningfully different from your salary, which remains subject to UK tax.

As a Crown servant, the salary and allowances you receive from the armed forces will continue to be taxed in the UK as normal, irrespective of the length of time you are outside the UK and whether you remain UK tax resident or become non-resident for tax purposes.

Your base pay is taxed; your LOA is not.

How Is the Daily Rate Calculated?

The methodology for calculating LOA changed significantly from 1 July 2021.

The changes are the result of a thorough review of the current methodology, in place since 1981, which took more than three years to complete. 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.

All service personnel who are eligible for LOA receive a daily rate based on where they are serving overseas, which is paid alongside monthly salaries. The daily rate is comprised of three separate elements that address different types of additional costs related to living overseas. These are: Cost of Living (CoL), which determines the difference in the cost of living between the UK and the overseas location; Environmental Factor (EF), which reflects the lived experience overseas in comparison with that in the UK.

The third element is a Location Factor (LF).

The Location Factor is a contribution towards any additional expenses including banking charges and other necessary costs specific to the overseas location.

Together, these three components make up your daily LOA rate. The formula is straightforward: your daily rate equals Cost of Living plus Environmental Factor plus Location Factor.

The new methodology is based on commercially available data used by multinational corporations like Shell and BP, as well as the Foreign, Commonwealth and Development Office (FCDO), and is needs-based.

This means the figures are grounded in real-world commercial data rather than internal MOD estimates alone.

What Affects Your LOA Rate?

Your Location

The location you serve in is the single biggest driver of your LOA rate. Countries and areas where everyday costs are substantially higher than in the UK attract higher daily rates. Currency movements also play a role:

a strong pound against a weak local currency means more for your money, which can lead to a reduction in LOA. A weak pound against a strong local currency means less for your money, which can lead to an increase in LOA.

LOA rates change twice a year and can go up and down, so be careful not to make your financial plan based on the current numbers.

This is critical advice. Never commit to fixed outgoings overseas on the assumption your LOA rate will stay the same.

Your Personal Status Category (PStat Cat)

Formerly known as marital status, the purpose of a personal status category (PStat Cat) is to determine entitlement to benefits.

Your PStat Cat directly affects which rate of LOA you receive. The main distinctions are as follows:

  • Accompanied (PStat Cat 1):

    Paid to service personnel who are either married or in a civil partnership and serving accompanied by their immediate family, occupying SFA, SSFA, or private accommodation.

    This is the highest rate.

  • Living-In (Unaccompanied):

    Paid to unaccompanied service personnel accommodated and messed in service facilities. The living-in rate is set at 64% of the living-out rate.

  • Residual:

    The residual rate is set at 49% of the appropriate living-out rate.

    A lower residual rate also exists at

    32% of the appropriate living-out rate.

  • Temporary Duty:

    Paid to unaccompanied service personnel when they are temporarily assigned to a LOA area. The temporary duty rate is set at 54% of the living-out rate.

 

Children in the Overseas Area

LOA and Seagoing Local Overseas Allowance are both provided as a daily rate which varies depending on your location and your Personal Status Category. LOA is also affected by the number of eligible children who live with you in the overseas area.

If you have children accompanying you overseas, a child element is added on top of the standard rate.

To further support those service personnel with accompanying children, the child rate is set to the maximum allowed by independent data.

Married Accompanied Service Couples (MASC)

If both you and your spouse are serving members of the armed forces assigned to the same location, the rules are slightly different.

If you are a service person married to another service person or in a civil partnership and assigned to the same LOA area, you will both receive the appropriate single or unaccompanied rate of LOA regardless of the type of accommodation you are living in. The service person in PStat Cat 1 will receive the child element for any accompanying children.

What Else Is in the LOA Package?

Since July 2021, the full LOA package is broader than just the daily rate. Two additional provisions were introduced to replace elements previously embedded in the old daily rate figure. It is important to compare the full package rather than the daily rate alone.

Overseas Private Vehicle Provision (OPVP)

Service personnel who are permanently assigned to an overseas location and in receipt of LOA may be eligible to claim OPVP to assist them with access to a private motor vehicle in the assignment location. OPVP provides a contribution up to a capped maximum.

Specifically,

OPVP provides a contribution towards either the cost of privately shipping one car to and from the permanent assignment location, the administrative and vehicle depreciation costs when selling and buying or leasing a vehicle, or the charges incurred when service personnel are required to cancel a vehicle lease agreement.

You can submit one claim per assignment order and will receive a maximum of £1,066.

Respite Provision (RP)

Respite Provision contributes towards the travel and accommodation costs for you and your family to take time away from your duty station. It is delivered through an annual contribution which is per person per annum and can only be used to contribute towards travel and accommodation costs, not food.

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.

The level of contribution is based on two factors: the ECA Location Rating for the location to which you are assigned, and the level of isolation experienced, both internal and external, that may increase travelling time to reach potential respite locations.

Seagoing LOA: A Different Version for Royal Navy Personnel

If you serve at sea rather than at a land-based overseas station, there is a separate provision.

The Seagoing Local Overseas Allowance is for service personnel who serve on a ship that is deployed outside UK waters, and covers periods of local shore leave.

The same principles of location and personal status apply, but the entitlement is tied to periods when you are ashore at an overseas port rather than the full duration of a deployment.

When You Cannot Claim LOA

There are specific circumstances where LOA is not payable.

You will not be able to claim this benefit if you claim the Deployment Welfare Package or if you are remote working outside of the overseas location to which you are assigned.

Additionally,

LOA is not normally paid for the day of emplaning or embarkation. If the individual continues to be eligible, payment is resumed on the day of deplaning or disembarkation.

Where to Find Your Rates and How Claims Work

To find out the rate for a particular overseas location, speak to your Unit HR or Unit Personnel Office, or you can find the rates on MODNet.

The daily LOA rate is processed automatically through your pay and does not require a personal claim. OPVP and Respite Provision are claimed separately via JPA iExpenses, with supporting documentation required and verified by your unit expenses authoriser.

The authoritative source for all LOA regulations is JSP 752, Chapter 9, which is updated regularly. Version 66 was published in May 2026 and is the current edition. Always refer to the latest version because rates and rules do change.

How LOA Fits Into Your Wider Financial Picture

LOA is a contribution, not a replacement for financial planning. It helps offset the cost differential of living abroad, but it does not cover every gap. There are things LOA cannot do for you: it does not replace income if you become seriously ill or injured and cannot serve, it does not protect your family’s finances if you die on an overseas posting, and it will not pay off a mortgage if your circumstances change suddenly.

Serving personnel are not eligible for standard income protection insurance because the risk profile of active service does not fit civilian underwriting. That gap needs to be addressed through products designed specifically for the military community. Serious illness cover, life cover, and personal accident cover are the instruments that fill these spaces. If you are posted overseas and you have not reviewed your protection arrangements, this is the right moment to do it.

Our Vitality Coach service is a free resource that helps you understand which cover is right for your circumstances, whether you are accompanied, unaccompanied, or in a complex family situation that standard civilian providers rarely understand. You can also keep up with the latest changes to pay, allowances, and financial conditions for service personnel through our monthly market review, updated every month.

Frequently Asked Questions

Is LOA the same for all ranks?

Service personnel now receive a single rate based on the cost of living in their respective locations, irrespective of rank. Distinctions continue to be made for unaccompanied and accompanied service personnel, and for personnel with accompanying children.

The old system, where senior ranks received a higher daily rate than junior ranks in the same location, was removed from July 2021.

Does LOA go up automatically with inflation?

No. LOA is reviewed and updated twice a year, and the changes are driven by real-world cost-of-living data specific to each location, including currency movements between sterling and the local currency.

If there is a significant change in the cost of living relative to the UK during the year, a decision would be made by the MOD and the single services as to whether the rates should change.

It can go up or down, and it is not linked directly to UK inflation figures.

Can I claim LOA if I am working remotely from the UK while assigned overseas?

No.

You will not be able to claim this benefit if you are remote working outside of the overseas location to which you are assigned.

LOA is specifically linked to your physical presence at the overseas duty station and the actual additional costs you incur by being there.

Does having children overseas increase my LOA?

Yes, if they are living with you in the overseas area.

LOA is designed to help cover your day-to-day expenses in certain overseas locations where the cost of living is higher than in the UK. LOA is also affected by the number of eligible children who live with you in the overseas area.

The child element is added on top of your standard personal rate and is intended to reflect the additional costs of supporting dependent children in a higher-cost environment.

What happens to LOA if I am temporarily deployed away from my permanent overseas base?

Your standard LOA may be replaced by a different rate or suspended during temporary deployments, depending on whether you are claiming the Deployment Welfare Package during that period.

Unaccompanied service personnel temporarily assigned to a LOA area receive the temporary duty rate, which is set at 54% of the living-out rate.

Always check with your unit HR before a temporary assignment so there are no surprises on your payslip.