The Special Reserve was established on 1 April 1908 with the function of maintaining a reservoir of manpower for the British Army and training replacement drafts in times of war. Its formation was part of the military reforms implemented by Richard Haldane, the Secretary of State for War, which also created the Territorial Force. Haldane originally intended that the Militia would provide the reserve, but opposition from its representatives forced him to abolish it and create the Special Reserve instead. Only 60 per cent of the Militia transferred into the new reserve, and it was consistently under strength, particularly in officers. Reservists enlisted for a six-year term of service, and had to undergo six months of basic training on recruitment and three to four weeks training annually.

The Haldane Reforms were a series of far-ranging reforms of the British Army made from 1906 to 1912, and named after the Secretary of State for War, Richard Burdon Haldane. They were the first major reforms since the "Childers Reforms" of the early 1880s, and were made in the light of lessons newly learned in the Second Boer War.