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HMRC internal manual

Tax Credits Technical Manual

Social Security Income: Welfare supplementary payments effective in Northern Ireland

TCTM04404 - Social Security Income: Welfare supplementary payments effective in Northern Ireland

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Introduction

To help the progress of the proposed welfare reform changes in Northern Ireland, a number of supplementary payment schemes have been introduced to mitigate losses in benefit that may occur as a result of those changes.

 

The Tax Credits (Definition and Calculation of Income) (Amendment) Regulations 2016/978

Where a person’s entitlement to a benefit reduces, or is lost altogether, supplementary payments may be paid by the Department for Communities to compensate for the reduction or loss in benefit for claimants in Northern Ireland.

For the purposes of tax credits welfare supplementary payments are treated in the same way as the benefit they replace.

This means that payments under the following regulations are included as income:

Part 3 of the Welfare Supplementary Payments Regulations (Northern Ireland) 2016 (S.R. (NI) 2016 No 178);

Part 2 of the Welfare Supplementary Payment (Loss of Carer Payments) Regulations (Northern Ireland) 2016 (S.R. (NI) 2016 No 253).

 

However, payments under the following regulations are excluded as income:

Part 2 of the Welfare Supplementary Payments Regulations (Northern Ireland) 2016 (S.R (N.I) 2016 No 178);

Parts 3 to 5 of the Welfare Supplementary Payment (Loss of Carer Payments) Regulations (Northern Ireland) 2016 (S.R (N.I) 2016/253);

the Welfare Supplementary Payment (Loss of Disability Living Allowance) Regulations (Northern Ireland) 2016 (S.R (N.I.) 2016 No 250); and

the Welfare Supplementary Payment (Loss of Disability-Related Premiums) Regulations (Northern Ireland) 2016 (S.R. (NI) 2016 No 254).

 

Supplementary Payments

The following Supplementary Payments are included when calculating income for tax credit purposes:

  • A payment as a result of the loss of contributory employment and support allowance paid under Part 3 the Welfare Supplementary Payments Regulations (Northern Ireland) 2016/178)
  • A payment as a result of the loss of Carer’s Allowance on a caree’s transition from Disability Living Allowance to Personal Independence Payment and paid under Part 2 of the Welfare Supplementary Payment (Loss of Carer Payments) Regulations (Northern Ireland) 2016/253

 

Example

A tax credit claimant is in receipt of Carer’s Allowance (CA) for caring for her disabled brother who is in receipt of DLA. Following the introduction of the Personal Independent Payment (PIP), the brother is reassessed as having no entitlement.  As a consequence the tax credit claimant loses entitlement to CA. The tax credit claimant may receive a Carer’s Supplementary Payment to mitigate the loss of CA. The Carer’s Supplementary Payment paid to the tax credit claimant is included as income in her tax credit calculation.

Note: Where a tax credit claimant receives a welfare supplementary payment in addition to income support, income-based jobseeker’s allowance, state pension credit or income related employment and support allowance, under regulation 4 of the Tax Credits (Income Thresholds and Determination of Rates) Regs 2002 the normal income test is not applied and the claimant will be entitled to the maximum rate of tax credits.  However, if their entitlement to the relevant benefit ceases, the normal income test is applied and any of the above welfare supplementary payments would be treated as income.

 

The following Supplementary Payments are excluded when calculating income for tax credit purposes:

  • A payment following the loss of benefit under Article 101 of the Welfare Reform (Northern Ireland) Order 2015 (‘benefit cap’) and paid under Part 2 of the Welfare Supplementary Payments Regulations (Northern Ireland) 2016/178
  • A payment following the loss of Disability Living Allowance on the transition to Personal Independence Payment and paid under the Welfare Payment (Loss of Disability Living Allowance) Regulations (Northern Ireland) 2016/250
  • A payment as a result of the loss of Disability Living Allowance on the transition to Personal Independence Payment in respect of conflict-related cases and paid under Part 4 of the Welfare Payment (Loss of Disability Living Allowance) Regulations (Northern Ireland) 2016/250

 

  • A payment to Income Support claimants following the loss of disability-related premium on the transition from Disability Living Allowance to Personal Independence Payment and paid under Part 2 of the Welfare Supplementary Payment (Loss of Disability-Related Premiums) Regulations (Northern Ireland) 2016/254.
  • A payment to Jobseeker’s Allowance claimants following the loss of disability-related premium on transition from Disability Living Allowance to Personal Independence Payment and paid under Part 3 of the Welfare Supplementary Payment (Loss of Disability-Related Premiums) Regulations (Northern Ireland) 2016/254.
  • A payment to Employment and Support Allowance claimants following the loss of a disability-related premium on transition from Disability Living Allowance to Personal Independence Payment and paid under Part 4 of the Welfare Supplementary Payment (Loss of Disability-Related Premiums) Regulations (Northern Ireland) 2016/254.

 

  • A payment to working tax credits claimants following the loss of a disability-related element in respect of Working Tax Credit on the transition from Disability Living Allowance to Personal Independence Payment  and paid under Part 5 of the Welfare Supplementary Payment (Loss of Disability-Related Premiums) Regulations (Northern Ireland) 2016/254.
  • A payment to State Pension Credit claimants following the loss of a severe disability component in respect of Pension Credit on the transition from Disability Living Allowance to Personal Independence Payment and paid under Part 6 of the Welfare Supplementary Payment (Loss of Disability-Related Premiums) Regulations (Northern Ireland) 2016/254.
  • A payment to Jobseeker’s Allowance, Employment and Support Allowance and Income Support claimants following the loss of Carer Premium on a caree’s transition from Disability Living Allowance to Personal Independence Payment and paid under Part 3 of the Welfare Supplementary Payment (Loss of Carer Payments) Regulations (Northern Ireland) 2016/253.
  • A payment following the loss of Income Support on a caree’s transition from Disability Living Allowance to Personal Independence Payment and paid under Part 4 of the Welfare Supplementary Payment (Loss of Carer Payments) Regulations (Northern Ireland) 2016/253.
  • A payment following the loss of the Additional Amount (Carer) of State Pension Credit on caree’s transition from Disability Living Allowance to Personal Independence Payment and paid under Part 5 of the Welfare Supplementary Payment (Loss of Carer Payments) Regulations (Northern Ireland) 2016/253.

 

Example

A tax credit claimant has been receiving Disability Living Allowance (DLA).  Following the replacement of DLA by the Personal Independence Payment (PIP), the claimant is reassessed for PIP and receives a lower award.  PIP Supplementary payment may be paid to mitigate the reduction in benefit.  PIP Supplementary payments are excluded from the calculation for tax credits.

 

Note: Where a person’s Housing Benefit reduces due to Social Sector Size Criteria, they may be entitled to receive welfare supplementary payments.  These will also be excluded from the calculation of income for the purposes of tax credits.

 

Further information on welfare supplementary payments is available on the nidirect website.