13:10

The Ministry of Defence is to spend about £4m reimbursing 8,000 military personnel who are paying higher income taxes in Scotland, with some highly-paid officers getting back £1,500 this year.

Gavin Williamson, the Defence secretary, said military personnel who have to pay higher Scottish income taxes would get a lump payment at the end of this tax year worth between £12 and £1,500 per head.

The move is designed to fuel the battle between the Conservatives and Edinburgh’s Scottish National party government over its decision to use Scotland’s new powers to set its own income tax rates.

Derek Mackay, the Scottish finance secretary, announced last December that higher tax rates would rise by 1p this year, with a new intermediate tax rate for middle earners, after intense pressure from Labour, the Lib Dems and Scottish Greens to use his new tax powers to boost spending.

Williamson claimed that unfairly penalised Scottish military personnel, many of whom are based overseas but are taxed at the Scottish rate, and would make Scotland a less attractive posting for army, navy and air force staff.

It could also put off some Scots from joining the armed forces because they would be paid less than their counterparts elsewhere in the UK. With youth unemployment rates at a low level currently, Scotland’s infantry regiments have been struggling to recruit new personnel.

“It is completely wrong for the brave men and women of our armed forces to be punished for serving in Scotland by unfair raids on their pay packets by the Scottish government,” he said.

Mackay insisted those higher taxes helped pay for other tangible benefits for Scottish residents, including free school meals, free prescriptions and eye tests and free tuition at Scottish universities. Scottish council tax and water rates are also often much lower than in England, while council spending is higher than in England.