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HMRC internal manual

PAYE Manual

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HM Revenue & Customs
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PAYE service income, allowances, benefits and deductions: IABD: taxable social security benefits

The table shows the type of taxable social security benefit income and whether

* The amount is carried forward to be coded in CY+1

Individual’s claims of Social Security Benefits can also be viewed on the Individual screen through Claims History.

Item Carried Forward
   
  YES
  YES
  YES
  YES
  52 weeks only

 

The Taxable Social Security Benefits screen displays the current amount which is view only

You can enter any revised information in the New Amount field

  • Select the relevant year from the Landing screen
  • You should enter whole pounds
  • You should enter the full amount for the year with the exception of Incapacity Benefit

Note: You should ensure you review the Taxable Social Security Benefits Detail screen before completing the New Amount field. To display this screen select the Edit Record icon at the right hand side.

The Taxable Social Security Benefits Detail screen will display

  • The benefit type selected
  • Start date
  • The Benefit amount
  • Type of Incapacity Benefit award. This will only be displayed if you have selected Incapacity Benefit from the Benefits screen

Taxable Incapacity Benefit

You should follow the guidance at PAYE77000 onwards before recording Incapacity Benefit (IB).

Note: In particular refer to PAYE77095 to ensure the record is correctly updated.

IB commenced in CY

For the first year you should

  • Select the correct tax year in which the benefit commenced
  • Select the Details screen
  • Enter the start date only where IB commenced in the current year (CY), otherwise leave blank
  • Enter the weekly amount of benefit

For revised awards

  • Remove the original start date
  • Do not enter the revised award start date
  • Manually calculate the actual amount of IB due in the tax year
  • Enter the revised amount of IB into IABD
  • Ensure CY+1 IABD is updated
  • Ensure you update Contact History with the revised amounts / dates received

For cessation in CY (commencing in CY-1) cases

The system is incorrectly calculating Incapacity Benefit (IB) for coding purposes where IB ceased in CY but commenced in CY-1. You must calculate the IB figure to use in IABD as follows

  • Calculate the weekly IB figure by dividing the total IB by the number of weeks to cessation
    Then
  • Use the following calculation to calculate the correct amount of benefit to enter into IABD

    • Multiply the weekly IB amount by (number of weeks to cessation minus 2 weeks)
      Then
    • Multiply by 52 / 50
    • Enter this amount into IABD

Any difference in the IB figures will be reviewed at end of year reconciliation. The IB entries included in IABD are for coding purposes only, the system will use the IB P14 and not the IABD entry in the end of year (EOY) reconciliation.

For IB cases commencing earlier than CY you must calculate the actual amount of IB received and enter the amount received and start date in IABD.

For further information on how IB is calculated for coding, see PAYE77020.

Once this information has been submitted from the Landing Screen, (action guide tax40002) the Coding rules will determine the amount to be used for coding purpose CY. For more information on this, see PAYE77040.

If IB ceases, you must enter an end date. Ensure CY+1 IABD is updated in accordance with tax40002.

If you have selected Incapacity Benefit, the following will be available for you to select as appropriate

  • Estimated Incapacity Benefit

    • If you are recording IB from any information from the customer, you must ensure this box is ticked. This will produce the correct notes on the P2
    • If for any reason the Incapacity Benefits uprating cannot take place the annual percentage update will be applied and this will also tick this box
  • Actual Incapacity Benefit

    • If you are recording IB from a P46 IB you should ensure this box is ticked. This will produce the correct notes on the P2
    • If the Incapacity Benefit uprating has been applied that will also tick this box

Jobseeker’s Allowance

If you have selected the Detail screen for Jobseeker’s Allowance

  • The Benefit Type for Jobseeker’s Allowance is read only

For more information on Jobseeker’s Allowance see PAYE78001. You should only enter an amount if Jobseeker’s Allowance is to be coded out.

Employment and Support Allowance

For the majority of ESA cases you will not be required to record any ESA amounts in IABD as this will be automatically populated through the DWP JSAPS computer system. However, for exceptional circumstances when you are required to complete IABD, you should follow the ESA instructions at PAYE77200 onwards, in particular you should read PAYE77295 before dealing with ESA cases.

Other Benefits

Other Benefits relate to other taxable state benefits, for example Industrial Death Benefit, Widowed Parent’s Allowance, Pension and Carer’s Allowance. For more information see PAYE76070 and action guide tax40161 before you enter the amount for CY and CY+1.

Up to November 2009

This field was not flowing to End of Year Reconciliation or Coding correctly and you were advised to record the ‘other benefit’ as state pension. Start dates should not have been entered under State Pension, and you should have entered the actual amount due in the year as ‘Annual’ and recorded a Contact History note to confirm the type of benefit entered.

From November 2009

The Other Benefits field will be available to update. You should select the Other Benefits field and

  • Enter a start date
  • Enter the taxable amount in pounds due for the year
  • If appropriate enter the ceased date

In your day to day work you should ensure that any income in respect of Other Benefits which has been recorded as State Pension is amended. You should

  • Check Contact History for the amount which has been included as State Pension
  • Reduce the amount of State Pension by the amount of the other benefit for the appropriate year
  • Ensure the amount is included as Other Benefits for the appropriate year

If you are recording Widowed Parent’s Allowance also see the guidance in action guide tax40161.

Bereavement Allowance

Bereavement benefit is paid for 52 weeks and may be split across tax years. In April 2015 a new field was made available to record ‘Bereavement Benefit’. There is no longer a need to set the Manual Code Indicator when coding Bereavement Benefit manually, as it will be apportioned and uplifted automatically at Annual Coding for CY+1.

When recording Bereavement Benefit

  • Enter a start date
  • Enter the taxable amount in pounds due for the year (use the the Bereavement Allowance Tool to calculate)
  • Enter the ceased date

For more information see action guide tax40161.