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Income Tax (Earnings and Pensions) Act 2003

Section 674: Taxable maximum: contribution-based jobseeker’s allowance

2672.This section sets out how to calculate the “taxable maximum” for a week in the case of a contribution-based allowance. It derives from section 151A(5) and (7) of ICTA.

2673.Subsection (2) sets out the rule for a single person. The taxable maximum is based on the amount of the “age-related amount” applicable to the person, excluding any amount of the allowance that relates to other people such as children or adult dependants.

2674.Subsection (3) sets out the general rule for a member of a couple. The taxable maximum is based on the amount of the income-based allowance which would have been payable to the person, excluding any amount of the allowance that relates to other people such as children or adult dependants.

2675.The charge on a contribution-based jobseeker’s allowance is in section 151A of ICTA rather than in section 617 of ICTA. So the general exemption for an increase in benefit for a child in section 617(1)(b) does not apply. But the definition of “taxable maximum” in section 151A ensures that any such increase is never taxed.

2676.Jobseeker’s allowance is included in the table of taxable United Kingdom benefits (section 660). So the general exemption for any increase in the benefit for a child applies (section 676). The sections exempt this increase twice: once in subsection (3) of this section in calculating the “taxable maximum” for jobseeker’s allowance, and again (generally) in section 676. This double exemption does not present any difficulties.

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