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Part 10Social security income

Chapter 1Introduction

655Structure of Part 10

(1)The structure of this Part is as follows—

(2)For other provisions about the taxation of social security benefits, see—

(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—

(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—

TSSI - PGD

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, 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—

TABLE A
TAXABLE UK BENEFITS
Social security benefitPayable under
Bereavement allowance

SSCBA 1992

SSCB(NI)A 1992

Section 39B

Section 39B

Carer’s allowance

SSCBA 1992

SSCB(NI)A 1992

Section 70

Section 70

Incapacity benefit

SSCBA 1992

SSCB(NI)A 1992

Section 30A(1) or (5), 40 or 41

Section 30A(1) or (5), 40 or 41

Income support

SSCBA 1992

SSCB(NI)A 1992

Section 124

Section 123

Jobseeker’s allowance

JSA 1995

JS(NI)O 1995

Section 1

Article 3

Statutory adoption paySSCBA 1992Section 171ZL
Any provision made for Northern Ireland which corresponds to section 171ZL of SSCBA 1992
Statutory maternity pay

SSCBA 1992

SSCB(NI)A 1992

Section 164

Section 160

Statutory paternity paySSCBA 1992Section 171ZA or 171ZB
Any provision made for Northern Ireland which corresponds to section 171ZA or section 171ZB of SSCBA 1992
Statutory sick pay

SSCBA 1992

SSCB(NI)A 1992

Section 151

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—

661Taxable social security income

(1)This section applies in relation to each of the following taxable benefits listed in Table A—

(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—

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 married or unmarried 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 “married couple” and “unmarried couple” have 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—

669Interpretation

(1)In section 668, except in relation to Northern Ireland—

(2)In section 668, in relation to Northern Ireland—

(3)In section 668 “relevant couple”, in relation to a claimant, means the married or unmarried 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—

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 married or unmarried 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 married or unmarried 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 married or unmarried 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 married or unmarried 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 married or unmarried 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—

(2)In sections 671 to 674, in relation to Northern Ireland—

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.

TABLE B—PART 1
BENEFITS PAYABLE UNDER PRIMARY LEGISLATION
Social security benefitPayable 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 creditTCA 2002Part 1
Council tax benefitSSCBA 1992Section 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

Housing benefit

SSCBA 1992

SSCB(NI)A 1992

Section 130

Section 129

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

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 creditTCA 2002Part 1
TABLE B — PART 2
BENEFITS PAYABLE UNDER REGULATIONS
Social security benefitPayable under regulations made under
Compensation payments where child support reduced because of a change in legislation

CSA 1995

CS(NI)O 1995

Section 24

Article 17

Payments to reduce under-occupation by housing benefit claimants

WRPA 1999

WRP(NI)O 1999

Section 79

Article 70

(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 the amount on which tax would be chargeable if the benefit were chargeable to tax under Case V of Schedule D (see in particular the provisions of ICTA listed in subsection (2)).

(2)Those provisions of ICTA are—

(a)sections 65 and 68 (calculation of the amount of the income on which tax is to be charged in the tax year);

(b)section 584 (relief for unremittable overseas income);

(c)section 585 (relief on delayed remittances).

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—