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HMRC internal manual

Tax Credits Manual

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HM Revenue & Customs
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Eligibility - income (other than earnings): Income - benefits (Info)

The customer’s social security income is the total amount paid to the customer under various Acts.

When calculating the customer’s social security income take into account the total amount paid to the customer in the tax year, regardless of the period to which it relates.

The following social security benefits are included

  • contributions-based Jobseeker’s Allowance (JSA), to the extent that is taxable
  • contributions-based Employment and Support Allowance (ESA), to the extent that is taxable
  • Incapacity Benefit, including any child dependency increase paid with taxable Incapacity Benefit but excluding any paid with non-taxable Incapacity Benefit
  • Carer’s Allowance (previously called Invalid Care Allowance) including any child dependency increase
  • Bereavement Allowance.

When calculating the customer’s social security income the payments listed below are disregarded

  • Armed Forces Independence Payment
  • Attendance Allowance
  • Back to Work bonus payable under the Jobseekers Act 1995
  • bereavement payment under Section 36 of the Contributions and Benefits Act 1992
  • Child Benefit
  • Christmas bonus payable under Section 148 of the Contributions and Benefits Act 1992
  • Council Tax Benefit or Council Tax Reduction Scheme
  • Disability Living Allowance
  • an ex-gratia payment made by the Secretary of State (or the Department for Social Development in Northern Ireland) to a person over pensionable age to supplement Incapacity Benefit
  • Guardian’s Allowance
  • Housing Benefit
  • Income Support (unless chargeable to income tax under Section 665 of Income Tax (Earnings and Pensions ) Act (ITEPA) 2003
  • Disabled Person’s Tax Credit
  • Working Families’ Tax Credit
  • Incapacity Benefit, that is payable

    • at the short-term lower rate
    • to a person who received Invalidity Benefit before 13 April 1995
  • Industrial Injuries Disablement Benefit
  • income-related Employment and Support Allowance
  • income-based Jobseeker’s Allowance
  • contributions-based Jobseeker’s Allowance, to the extent that it exceeds the taxable maximum in Section 674 of the ITEPA 2003
  • contributions-based Employment and Support Allowance, to the extent that it exceeds the taxable maximum in Section 674 of the ITEPA 2003
  • Maternity Allowance
  • Personal Independence Payment
  • Severe Disablement Allowance
  • Social Fund payments (including winter fuel payments)
  • any discretionary housing payment paid under Regulation 2 of the Discretionary Financial Assistance Regulations 2001
  • payment to compensate for the non-payment or loss of entitlement of Income Support, Jobseeker’s Allowance, Employment and Support Allowance, Housing Benefit or Housing Benefit supplement
  • payment in lieu of Healthy Start vouchers or the supply of vitamins under the Health Start scheme and Welfare Food (Amendment No. 2) Regulations 2006
  • Statutory Maternity Pay under Part 12 of the Contributions and Benefits Act 1992
  • Statutory Sick Pay under Part 11 of the Contributions and Benefits Act 1992
  • Statutory Adoption Pay under Part 12ZB of the Contributions and Benefits Act 1992
  • Statutory Paternity Pay under Part 12ZA of the Contributions and Benefits Act 1992
  • Additional Statutory Paternity Pay under Part 12ZA of the Contributions and Benefits Act 1992 (c.4) and under Part 12ZA of the Contributions and Benefits (Northern Ireland) Act 1992 (c.7).
  • Statutory Shared Parental Pay under Part 7 of the Children and Families Act 2014 and under the Work and Families Act (Northern Ireland) 2015.

Note: Statutory Adoption Pay, Statutory Maternity Pay and Statutory Sick Pay are excluded from social security income for tax credit purposes and are dealt with as employment income instead.

Disregard any increase for a dependant that is payable with any of the allowances or benefits listed in Regulation 7(3), Table 3 of the Tax Credits (Definition and Calculation of Income) Regulations 2002.

What to include in ‘other income’

  • State Pension
  • Industrial Death Benefit
  • Widowed Mother’s Allowance
  • Widowed Parent’s Allowance
  • Widow’s Pension

If you have any of these benefits listed above, include the total amount in the ‘other income box’ but remember to include other income too.