Chapter 5: UK social security benefits wholly exempt from income tax
Overview
2679.This Chapter sets out the United Kingdom benefits that are not charged to tax.
2680.This Chapter deals with the benefits that are never taxable. Chapter 4 deals with the benefits that are sometimes taxable.
Section 677: UK social security benefits wholly exempt from tax: Table B
2681.This section introduces and sets out the table (“Table B”) of exempt benefits. It derives from section 617(1)(a) and (2) of ICTA.
2682.Subsection (1) introduces the second of the tables (“Table B”). This table lists the exempt United Kingdom benefits. The first table (“Table A”) is in section 660 – see paragraph 2609.
2683.In order to make the exemptions simple and consistent the phrase “no liability to income tax arises” is used throughout this Act to express exemption from tax. See Note 28 in Annex 2.
2684.Part 1 of the table identifies each benefit by the section of the social security Act under which it is paid. Part 2 of the table identifies the benefits that are paid under regulations. The table also identifies the corresponding Northern Ireland provisions.
2685.The table arranges the benefits in alphabetical order. This means that a particular benefit should be easy to find. And it should be easy to maintain the clarity of the table because it will be easy to insert any new benefit into the table in the right place.
2686.Disabled person’s tax credit and working families’ tax credit are abolished by section 1(3) of the Tax Credits Act 2002. They are not taxable. The exemption is preserved by paragraph 88 of Schedule 7 to this Act.
2687.Subsection (2) is a signpost to the special treatment of industrial death benefit. This benefit is part of industrial injuries benefit, which appears in Table B and is not generally taxable. But industrial death benefit is a pension and is charged to tax in the pension income Part.
