The Taxation of Northern Ireland Welfare Supplementary Payments Regulations 2017

EXPLANATORY NOTE

(This note is not part of the Regulations)

These Regulations amend Part 10 and Part 1 of Schedule 1 of the Income Tax (Earnings and Pensions) Act 2003 (c. 1) (“ITEPA 2003”) in order to make provision for welfare supplementary payments (“WSPs”) which are paid by the Northern Ireland Executive, subsequent to changes in Northern Ireland welfare legislation. Northern Ireland legislation provides that one of the criteria for eligibility to each of the WSPs is an eligibility to an existing benefit at the time at which a person becomes eligible for a WSP. The amendments made in these Regulations ensure that the taxation rules relating to the WSPs are the same as the rules relating to the benefit from which eligibility is derived. All the amendments referred to below are to ITEPA 2003.

Regulation 2 provides that amendments made in these Regulations have effect for the 2016-2017 tax year and subsequent tax years pursuant to the power contained in section 44(5) Finance Act 2016 (c. 24).

Regulation 4 amends section 658(4) to provide that the amount of taxable income for WSPs, where eligibility is derived from eligibility to income support and contribution based employment and support allowance, is determined in accordance with section 661.

Regulation 5 amends Table A in section 660 to include in that table as taxable WSPs to which a person is entitled under the following provisions:

• Regulation 7 of the Welfare Supplementary Payments Regulations (Northern Ireland) 2016 S.R.(N.I.) 2016 No. 178 (“the WSPR(NI) 2016”) due to the loss of contributory employment and support allowance,

• regulation 4 of the Welfare Supplementary Payment (Loss of Carer Payments) Regulations (Northern Ireland) 2016 S.R.(N.I.) 2016 No. 253 (“the WSP(LCP)R(NI) 2016”) due to the loss of carer’s allowance,

• regulation 8 when the entitlement is due to meeting the condition in regulation 8(2)(a) and 8(2)(c) of the WSP(LCP)R(NI) 2017 due to the loss of carer premium when claiming either income support or jobseeker’s allowance,

• regulation 12 of the WSP(LCP)R(NI) 2016 due to the loss of income support,

• regulation 4, 5 or 6 of the Welfare Supplementary Payment (Loss of Disability Related Premiums) Regulations (Northern Ireland) 2016 S.R.(N.I)2016 No. 254 (“the WSP(LDRP)R(NI) 2016”) due to the loss of disability related premium when claiming income support, and

• regulation 11, 12 ,13 14 or 15 of the WSP(LDRP)R(NI) 2016 due to the loss of disability related premium when claiming jobseeker’s allowance.

Regulation 6 amends section 661 to include the WSPs to which entitlement derives from one of the benefits currently listed in section 661 and ensure that the WSPs added are taxed on the same basis as those benefits (that the amount taxable is the amount of the payment accruing in a tax year regardless of when it is paid).

Regulation 8 amends section 665 to provide that when a person receives a WSP to which that person is entitled due to the receipt of Income Support, that WSP is exempt from income tax except when that person is involved in a trade dispute – as defined in section 14 of the Jobseekers Act 1995 (trade disputes) or Article 16 of the Jobseekers (Northern Ireland) Order 1995 (trade disputes).

Regulations 9 to 11 amend sections 667 to 669 to include in the “taxable maximums” provisions (which relate to income support), WSPs to which a person is entitled due to the receipt of income support. Those provisions provide an upper limit to the amount of tax payable on receipt of income support. This ensures that any payment of such a WSP is included in the taxable maximum calculations relating to income support.

Regulations 13 and 14 amend sections 671 and 675 to include in the taxable maximums provisions (which relate to jobseeker’s allowance) WSPs to which a person is entitled due to the receipt of jobseeker’s allowance. Those provisions provide an upper limit to the amount of tax payable on receipt of jobseekers allowance. This ensures that any payment of such a WSP is included in the taxable maximum calculations relating to jobseeker’s allowance.

Regulation 15 amends Table B in section 677 to include in that table as exempt from tax WSPs to which a person is entitled under the following provisions:

• Regulation 2 of the Housing Benefit (Welfare Supplementary Payment) Regulations 2017 S.R. (N.I.) 2017 No. 35 due to loss of housing benefit,

• regulation 4 of the WSPR(NI) 2016 due to loss of housing benefit,

• regulation 4, 8, 13 or 14 of the Welfare Supplementary Payment (Loss of Disability Living Allowance) Regulations (Northern Ireland) 2016 S.R.(N.I.) 2016 No. 250 due to the loss of disability living allowance,

• regulation 8 – when the entitlement is due to meeting the condition in regulation 8 (2)(b) of the WSP(LCP)R(NI) 2017 due to the loss of carer premium when claiming employment and support allowance,

• regulation 16 of the WSP(LCP)R(NI) 2017 due to the loss of the additional amount (carer) of state pension credit,

• regulation 20,21 or 22 of the WSP(LDRP)R(NI) 2016 due to the loss of disability related premium when claiming employment and support allowance,

• regulation 27 or 28 of the WSP(LDRP)R(NI) 2016 due to the loss of the disability related element when claiming working tax credits, and

• regulation 33 or 34 of the WSP(LDRP)R(NI) 2016 due to the loss of the severe disability component when claiming state pension tax credits.

Regulation 16 amends the table of abbreviations of Acts and Instruments in Part 1 of Schedule 1 to include abbreviations for the names of the Instruments inserted into Part 10.

A Tax Information and Impact Notice covering the changes made by this instrument was published on 9 July 2016 alongside New Clause 9 of the Finance Bill 2016 and is available on the website at.https://www.gov.uk/government/publications/finance-bill-2016-report-stage It remains an accurate summary of the impacts that apply to this instrument.