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HMRC internal manual

Tax Credits Technical Manual

Income: employment income rules - Specific payments and benefits in kind excluded from employment income for tax credit purposes: Job Grant, Return to Work Credit, etc

The Tax Credits (Definition and Calculation of Income) Regulations 2002, Reg 4 (4) Table 1 (item 16 and item 16A)

A payment made by the DWP

  • By way of an In-Work Credit Better Off In Work Credit, Job Grant or Return to Work Credit.
  • Under the Employment Retention and Advancement Scheme or the Working Neighbourhoods Pilot (all made under section 2 of the Employment and Training Act 1973).
  • Under the City Strategy Pathfinder Pilots,
  • By way of an In-Work Emergency Discretion Fund payment pursuant to arrangements made by the Secretary of State, or
  • By way of an Up-front Childcare Fund payment pursuant to arrangements made by the Secretary of State
  • Under the Future Capital pilot scheme

A payment made by the Department for Employment and Learning in Northern Ireland under section 1 of the Employment and Training Act (Northern Ireland) 1950 by way of Return to Work Credit.

Any In-Work Emergency Fund payment made to a person following arrangements made by the Department of Economic Development under section 1 of the Employment and Training Act (Northern Ireland) 1950

 

Note: With effect from 6 April 2017 the way in which many salary sacrifice and benefit in kind schemes are taxed will change, which means that some tax credit claimants will see an increase in their taxable income.

For the purposes of tax credits, where one of these schemes is in operation the taxable income figure should be used.