K1rbs
Can only speak wrt AFP75, Gratuity is always tax free. The pension can either be a Service Invaliding Pension (SIP) which is paid in full and index linked from day 1. This pension is taxable. Or a Service Atributable Pension (SAP) paid in full and index linked from day 1 and may or may not be paid tax free. If you have a SAP and your Primary Invaliding Condition (PIC) is classified for War Pension purposes 20% or above and attributable to service, your SAP WILL be paid free of tax. If your PIC is classified between 1%-19%, your SAP MAY be paid free of tax, but you'll have to fight for it. If your PIC is classified at 0%, even if attributable you WILL pay tax on it.
If you disagree with the initial award, begin the appeal IMMEDIATELY, there is a time limit. Join the RBL, they will fight on your behalf, and also the Pension Society.
I speak as one screwed over by the system (tax wise), don't let it happen to you.