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Income Tax (Earnings and Pensions) Act 2003

Section 671: Amounts in excess of taxable maximum

2660.This section deals with the second restriction to the charge to tax on jobseeker’s allowance. It derives from section 151A of ICTA.

2661.Subsection (1)sets out the restriction. No more than the “taxable maximum” of the benefit is taxable. This term is used in section 151A(2) of ICTA. The section retains it as a useful and clear label for an amount that has to be calculated by applying the rules in sections 672 to 674.

2662.There are two types of jobseeker’s allowance: income-based and contribution-based. The amount of a contribution-based allowance is determined simply by the claimant’s age. But a couple may also qualify for an income-based addition to a contribution-based allowance, to bring the allowance up to the amount of income support.

2663.In the case of a couple, the taxable maximum is based on what would have been payable to the couple as an income-based allowance.

2664.The rules are complicated because they have to deal with:

  • the difference between an income-based allowance and a contribution-based allowance;

  • amounts of jobseeker’s allowance that are attributable to persons other than the claimant;

  • a person involved in a strike being prevented from claiming the allowance; and

  • an allowance payable for a period of less than a week.

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