Part 10Social security income
Chapter 1Introduction
655Structure of Part 10
1
The structure of this Part is as follows—
Chapter 2—
a
imposes the charge to tax on social security income, and
b
provides for deductions to be made from the amount of income chargeable;
Chapter 3 sets out the UK social security benefits which are charged to tax under this Part and identifies—
a
the amount of income chargeable to tax for a tax year, and
b
the person liable to pay any tax charged;
Chapters 4 and 5 deal with exemptions from the charge to tax on UK social security benefits (whether under this Part or any other provision);
Chapters 6 and 7 make provision about foreign benefits.
2
For other provisions about the taxation of social security benefits, see—
section 151 of FA 1996 (power for the Treasury to make orders about the taxation of benefits payable under Government pilot schemes);
F5section 781 of ITTOIA 2005 (exemption from income tax for payments under New Deal 50plus);
section 782 of ITTOIA 2005 (exemption from income tax for payments under employment zone programmes).
3
For the charge to tax on social security pensions, see Part 9 (pension income).
Chapter 2Tax on social security income
656Nature of charge to tax on social security income
1
The charge to tax on social security income is a charge to tax on that income excluding any exempt income.
2
“Exempt income” is social security income on which no liability to income tax arises as a result of any provision of Chapter 4, 5 or 7 of this Part.
This definition applies for the purposes of this Part.
657Meaning of “social security income”, “taxable benefits” etc.
1
This section defines—
“social security income” for the purposes of the Tax Acts, and
“taxable benefits”, “Table A” and “Table B” for the purposes of this Part.
2
“Social security income” means—
a
the United Kingdom social security benefits listed in Table A,
b
the United Kingdom social security benefits listed in Table B,
c
the foreign benefits to which section 678 applies, and
d
the foreign benefits to which section 681(2) applies.
3
“Taxable benefits” means—
a
the United Kingdom social security benefits listed in Table A, and
b
the foreign benefits to which section 678 applies.
4
Subsections (2) and (3) are subject to section 660(2).
5
“Table A” means Table A in section 660.
6
“Table B” means Table B in section 677.
658Amount charged to tax
1
The amount of social security income which is charged to tax under this Part for a particular tax year is as follows.
2
In relation to a taxable benefit, the amount charged to tax is the net taxable social security income for the tax year.
3
The net taxable social security income for a taxable benefit for a tax year is given by the formula—
where—
TSSI means the amount of taxable social security income for that benefit for that year (see subsections (4) to (7)), and
PGD means the amount of the deduction (if any) allowed from the benefit under Part 12 (payroll giving).
4
In relation to bereavement allowance, carer’s allowance, F19contributory employment and support allowance, incapacity benefit and income support (which are listed in Table A), the amount of taxable social security income is determined in accordance with section 661.
5
In relation to any other benefit listed in Table A, the amount of taxable social security income is the amount of the benefit that falls to be charged to tax.
6
In relation to foreign benefits to which section 678 applies, the amount of taxable social security income is determined in accordance with section 679.
7
In determining for the purposes of this Act the amount of taxable social security income, any exempt income is to be excluded.
659Person liable for tax
The person liable for any tax charged under this Part is identified in—
a
section 662 (UK benefits), or
b
section 680 (foreign benefits).
Chapter 3Taxable UK social security benefits
660Taxable benefits: UK benefits – Table A
1
This is Table A—
Social security benefit | Payable under | |
|---|---|---|
F24Additional statutory paternity pay | SSCBA | Section 171ZEA or 171ZEB |
Any provision made for Northern Ireland which corresponds to section 171ZEA or 171ZEB of SSCBA 1992. | ||
Bereavement allowance | SSCBA 1992 | Section 39B |
SSCB(NI)A 1992 | Section 39B | |
Carer’s allowance | SSCBA 1992 | Section 70 |
SSCB(NI)A 1992 | Section 70 | |
F20Contributory employment and support allowance | WRA 2007 | Section 1(2)(a) |
Any provision made for Northern Ireland which corresponds to section 1(2)(a) of WRA 2007 | ||
Incapacity benefit | SSCBA 1992 | Section 30A(1) or (5), 40 or 41 |
SSCB(NI)A 1992 | Section 30A(1) or (5), 40 or 41 | |
Income support | SSCBA 1992 | Section 124 |
SSCB(NI)A 1992 | Section 123 | |
Jobseeker’s allowance | JSA 1995 | Section 1 |
JS(NI)O 1995 | Article 3 | |
F25Ordinary statutory paternity pay | SSCBA 1992 | Section 171ZA or 171ZB |
Any provision made for Northern Ireland which corresponds to section 171ZA or 171ZB of SSCBA 1992. | ||
Statutory adoption pay | SSCBA 1992 | Section 171ZL |
Any provision made for Northern Ireland which corresponds to section 171ZL of SSCBA 1992 | ||
Statutory maternity pay | SSCBA 1992 | Section 164 |
SSCB(NI)A 1992 | Section 160 | |
F27. . . | F27. . . | F27. . . |
Statutory sick pay | SSCBA 1992 | Section 151 |
SSCB(NI)A 1992 | Section 147. | |
2
A benefit listed below is not “social security income” or a “taxable benefit” if it is charged to tax under another Part of this Act—
F26additional statutory paternity pay;
ordinary statutory paternity pay;
statutory adoption pay;
statutory maternity pay;
statutory sick pay.
661Taxable social security income
1
This section applies in relation to each of the following taxable benefits listed in Table A—
bereavement allowance,
carer’s allowance,
F21contributory employment and support allowance,
incapacity benefit, and
income support.
2
The amount of taxable social security income for a taxable benefit for a tax year is the full amount of the benefit accruing in the tax year irrespective of when any amount is actually paid.
662Person liable for tax
The person liable for any tax charged under this Part on a taxable benefit listed in Table A is the person receiving or entitled to the benefit.
Chapter 4Taxable UK social security benefits: exemptions
Incapacity benefit
663Long-term incapacity benefit: previous entitlement to invalidity benefit
1
No liability to income tax arises on long-term incapacity benefit if—
a
a person is entitled to the benefit for a day of incapacity for work which falls in a period of incapacity for work which is treated for the purposes of that benefit as having begun before 13th April 1995, and
b
the part of that period which is treated as having fallen before that date includes a day for which that person was entitled to invalidity benefit.
2
In this section—
“invalidity benefit” means invalidity benefit under—
- a
Part 2 of SSCBA 1992, or
- b
Part 2 of SSCB(NI)A 1992;
- a
“long-term incapacity benefit” means incapacity benefit payable under—
- a
section 30A(5), 40 or 41 of SSCBA 1992, or
- b
section 30A(5), 40 or 41 of SSCB(NI)A 1992.
- a
664Short-term incapacity benefit not payable at the higher rate
1
No liability to income tax arises on short-term incapacity benefit unless it is payable at the higher rate.
2
In this section—
a
“short-term incapacity benefit” means incapacity benefit payable under—
i
section 30A(1) of SSCBA 1992, or
ii
section 30A(1) of SSCB(NI)A 1992;
b
the reference to short-term incapacity benefit payable at the higher rate is to be construed in accordance with—
i
section 30B of SSCBA 1992, or
ii
section 30B of SSCB(NI)A 1992.
Income support
665Exempt unless payable to member of couple involved in trade dispute
1
No liability to income tax arises on income support unless—
a
the income support is payable to one member of a F12... couple (“the claimant”), and
b
section 126 of SSCBA 1992 or section 125 of SSCB(NI)A 1992 (trade disputes) applies to the claimant but not to the other member of the couple.
2
In this section F13“couple” has the same meaning as in section 137(1) of SSCBA 1992 or section 133(1) of SSCB(NI)A 1992.
666Child maintenance bonus
No liability to income tax arises on a part of income support which is attributable to a child maintenance bonus (within the meaning of section 10 of CSA 1995 or Article 4 of CS(NI)O 1995).
667Amounts in excess of taxable maximum
1
If the amount of income support paid to a person (“the claimant”) for a week or a part of a week exceeds the claimant’s taxable maximum for that period, no liability to income tax arises on the excess.
2
The claimant’s taxable maximum for a period is determined under section 668.
668Taxable maximum
1
A claimant’s taxable maximum for a week is determined under this subsection if the applicable amount for the purpose of calculating the income support consists only of an amount in respect of the relevant couple.
The taxable maximum is equal to one half of the applicable amount.
2
A claimant’s taxable maximum for a week is determined under this subsection if the applicable amount includes amounts that are not in respect of the relevant couple.
The taxable maximum is equal to one half of the amount which is included in the applicable amount in respect of the relevant couple.
3
A claimant’s taxable maximum for a part of a week is determined as follows—
Step 1
Assume that the income support is paid to the claimant for the whole of, rather than part of, the week.
Step 2
Determine under subsection (1) or (2) what the claimant’s taxable maximum for that week would be on that assumption.
Step 3
Determine the claimant’s taxable maximum for the part of the week using this formula—
where—
N is the number of days in the part of the week for which the claimant is actually paid the income support, and
TMW is the taxable maximum for the whole week determined under step 2.
669Interpretation
1
In section 668, except in relation to Northern Ireland—
“applicable amount” means the amount prescribed in relation to income support in regulations made under section 135 of SSCBA 1992;
F6“couple” has the same meaning as in section 137(1) of SSCBA 1992
2
In section 668, in relation to Northern Ireland—
“applicable amount” means the amount prescribed in relation to income support in regulations made under section 131 of SSCB(NI)A 1992;
F7“couple” has the same meaning as in section 133(1) of SSCB(NI)A 1992
3
In section 668 “relevant couple”, in relation to a claimant, means the F8... couple of which the claimant is a member.
Jobseeker’s allowance
670Child maintenance bonus
No liability to income tax arises on a part of a jobseeker’s allowance which is attributable to a child maintenance bonus (within the meaning of section 10 of CSA 1995 or Article 4 of CS(NI)O 1995).
671Amounts in excess of taxable maximum
1
If the amount of jobseeker’s allowance paid to a person (“the claimant”) for a week or a part of a week exceeds the claimant’s taxable maximum for that period, no liability to income tax arises on the excess.
2
The claimant’s taxable maximum for a period is determined under sections 672 to 674.
672Taxable maximum: general
1
A claimant’s taxable maximum for a week is determined—
a
under section 673, if the claimant is paid an income-based jobseeker’s allowance for that week, or
b
under section 674, if the claimant is paid a contribution-based jobseeker’s allowance for that week.
2
A claimant’s taxable maximum for a part of a week is determined as follows—
Step 1
Assume that the jobseeker’s allowance is paid to the claimant for the whole of, rather than part of, the week.
Step 2
Determine under section 673 or 674 what the claimant’s taxable maximum for that week would be on that assumption.
Step 3
Determine the claimant’s taxable maximum for the part of the week using this formula—
where—
N is the number of days in the part of the week for which the claimant is actually paid the jobseeker’s allowance, and
TMW is the taxable maximum for the whole week determined under step 2.
673Taxable maximum: income-based jobseeker’s allowance
1
A claimant’s taxable maximum for a week is determined under this section if—
a
the claimant is paid an income-based jobseeker’s allowance for that week, or
b
the claimant is assumed under section 672(2) to be paid an income-based jobseeker’s allowance for that week.
2
If the claimant is not a member of a F9... couple, the claimant’s taxable maximum for the week is equal to the age-related amount which would be applicable to the claimant if a contribution-based jobseeker’s allowance were payable to the claimant for that week.
3
If the claimant is a member of a F10... couple, the claimant’s taxable maximum for the week is equal to the portion of the applicable amount which is included in the jobseeker’s allowance in respect of the couple for that week.
4
But if—
a
the claimant is a member of a F11... couple, and
b
the other member of that couple is prevented by section 14 of JSA 1995 or Article 16 of JS(NI)O 1995 (trade disputes) from being entitled to a jobseeker’s allowance,
the claimant’s taxable maximum for that week is equal to half the portion of the applicable amount which is included in the jobseeker’s allowance in respect of the couple for that week.
674Taxable maximum: contribution-based jobseeker’s allowance
1
A claimant’s taxable maximum for a week is determined under this section if—
a
the claimant is paid a contribution-based jobseeker’s allowance for that week, or
b
the claimant is assumed under section 672(2) to be paid a contribution-based jobseeker’s allowance for that week.
2
If the claimant is not a member of a F14... couple, the claimant’s taxable maximum for the week is equal to the age-related amount which is applicable to the claimant for that week.
3
If the claimant is a member of a F15... couple, the claimant’s taxable maximum for the week is equal to the portion of the applicable amount which would be included in the jobseeker’s allowance in respect of the couple if an income-based jobseeker’s allowance were payable to the claimant for that week.
675Interpretation
1
In sections 671 to 674, except in relation to Northern Ireland—
“age-related amount” and “applicable amount” mean the amounts determined as such in accordance with regulations made under section 4 of JSA 1995;
“contribution-based jobseeker’s allowance” and “income-based jobseeker’s allowance” have the same meaning as in section 1(4) of JSA 1995;
F16“couple” has the same meaning as in section 35(1) of JSA 1995
2
In sections 671 to 674, in relation to Northern Ireland—
“age-related amount” and “applicable amount” mean the amounts determined as such in accordance with regulations made under Article 6 of JS(NI)O 1995;
“contribution-based jobseeker’s allowance” and “income-based jobseeker’s allowance” have the same meaning as in Article 3(4) of JS(NI)O 1995;
F17“couple” has the same meaning as in Article 2(2) of JS(NI)O 1995
Increases in respect of children
676Increases in respect of children
No liability to income tax arises on a part of a taxable benefit listed in Table A which is attributable to an increase in respect of a child.
Chapter 5UK social security benefits wholly exempt from income tax
677UK social security benefits wholly exempt from tax: Table B
1
No liability to income tax arises on the United Kingdom social security benefits listed in Table B.
Social security benefit | Payable under | |
|---|---|---|
Attendance allowance | SSCBA 1992 SSCB(NI)A 1992 | Section 64 Section 64 |
Back to work bonus | JSA 1995 JS(NI)O 1995 | Section 26 Article 28 |
Bereavement payment | SSCBA 1992 SSCB(NI)A 1992 | Section 36 Section 36 |
Child benefit | SSCBA 1992 SSCB(NI)A 1992 | Section 141 Section 137 |
Child’s special allowance | SSCBA 1992 SSCB(NI)A 1992 | Section 56 Section 56 |
Child tax credit | TCA 2002 | Part 1 |
Council tax benefit | SSCBA 1992 | Section 131 |
Disability living allowance | SSCBA 1992 SSCB(NI)A 1992 | Section 71 Section 71 |
Guardian’s allowance | SSCBA 1992 SSCB(NI)A 1992 | Section 77 Section 77 |
F23Health in pregnancy grant | SSCBA 1992 SSCB(NI)A 1992 | Section 140A Section 136A |
Housing benefit | SSCBA 1992 SSCB(NI)A 1992 | Section 130 Section 129 |
F18In-work credit | ETA 1973 ETA(NI) 1950 | Section 2 Section 1 |
In-work emergency discretion fund payment | ETA 1973 | Section 2 |
In-work emergency fund payment | ETA(NI) 1950 | Section 1 |
F22Income-related employment and support allowance | WRA 2007 Any provision made for Northern Ireland which corresponds to section 1(2)(b) of WRA 2007 | Section 1(2)(b) |
Industrial injuries benefit (apart from industrial death benefit) | SSCBA 1992 SSCB(NI)A 1992 | Section 94 Section 94 |
Pensioner’s Christmas bonus | SSCBA 1992 SSCB(NI)A 1992 | Section 148 Section 144 |
Payments out of the social fund | SSCBA 1992 SSCB(NI)A 1992 | Section 138 Section 134 |
F18Return to work credit | ETA 1973 ETA(NI) 1950 | Section 2 Section 1 |
Severe disablement allowance | SSCBA 1992 SSCB(NI)A 1992 | Section 68 Section 68 |
State maternity allowance | SSCBA 1992 SSCB(NI)A 1992 | Section 35 Section 35 |
State pension credit | SPCA 2002 SPCA(NI) 2002 | Section 1 Section 1 |
Working tax credit | TCA 2002 | Part 1 |
2
Industrial death benefit is charged to tax under Part 9 (see section 577).
3
In this section “industrial death benefit” means any benefit payable under—
a
section 94 of, and Part 6 of Schedule 7 to, SSCBA 1992, or
b
section 94 of, and Part 6 of Schedule 7 to, SSCB(NI)A 1992.
Chapter 6Taxable foreign benefits
678Taxable benefits: foreign benefits
1
This section applies to any benefit which is payable under the law of a country or territory outside the United Kingdom if—
a
it is substantially similar in character to a benefit listed in Table A, and
b
it is payable to a person resident in the United Kingdom.
2
But this section does not apply to a benefit which is charged to tax under Part 9 (pension income).
679Taxable social security income
1
If section 678 applies, the taxable social security income for a taxable benefit for a tax year is F3the full amount of the social security income arising in the tax year, but subject to subsection (2).
F22
That income is treated as relevant foreign income for the purposes of Chapters 2 and 3 of Part 8 of ITTOIA 2005 (relevant foreign income: remittance basis and deductions and reliefs).
3
See also Chapter 4 of that Part (unremittable income).
680Person liable for tax
The person liable for any tax charged under this Part on a benefit to which section 678 applies is the person receiving or entitled to the benefit.
Chapter 7Taxable and other foreign benefits: exemptions
681Taxable and other foreign benefits: exemptions
1
No liability to income tax arises on a taxable foreign benefit if, or to the extent that, the corresponding UK benefit is exempt income.
2
No liability to income tax arises on a benefit which is payable under the law of a country or territory outside the United Kingdom if it is substantially similar in character to a United Kingdom social security benefit listed in Table B.
3
In this section—
“taxable foreign benefit” means a benefit to which section 678 applies;
“corresponding UK benefit”, in relation to a taxable foreign benefit, means the taxable benefit listed in Table A to which the foreign benefit is substantially similar in character (see section 678).
681AF4Foreign benefits of consular employees
1
No liability to income tax arises in respect of any benefit to which section 678 applies of a consular officer or employee in the United Kingdom for a foreign state if—
a
Her Majesty by Order in Council directs that this section applies to the foreign state for the purpose of giving effect to a reciprocal arrangement with that state, and
b
the officer or employee meets conditions A to C.
2
Condition A is that the officer or employee is not—
a
a British citizen,
b
a British overseas territories citizen,
c
a British National (Overseas), or
d
a British Overseas citizen.
3
Condition B is that the officer or employee is not engaged in any trade, profession, vocation or employment in the United Kingdom, otherwise than as a consular officer or employee of the state in question.
4
Condition C is that the officer or employee—
a
is a permanent employee of that state, or
b
was not ordinarily resident in the United Kingdom immediately before becoming a consular officer or employee in the United Kingdom of that state.
5
In this section—
“consular officer or employee” includes any person employed for the purposes of the official business of a consular officer at—
- a
any consulate,
- b
any consular establishment, or
- c
any other premises used for those purposes, and
- a
“reciprocal agreement” has the same meaning as in section 302.
6
Section 302(5) to (7) apply to an Order under subsection (1) and the operation of this section as they apply to an Order under section 302(1) and the operation of section 302.