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HMRC internal manual

Tax Credits Technical Manual

HM Revenue & Customs
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Notional Income

Claimants provide services to others for less than full earnings

Notional earnings

The Tax Credits (Definition and Calculation of Income ) Regulations 2002, Reg.17If a claimant provides a service for another person and:

  • the other person makes no payment of earnings or pays less than for a comparable employment, trade or business in the area; and
  • the Commissioner’s for Revenue & Customs are satisfied that the other person has the means to pay for, or to pay more for the service, then
  • The claimant is treated as having an amount of employment or trading income that is reasonable for that employment, trade or business.

Note: This does not apply to claimants who are volunteers, or are engaged to provide aservice to a charitable or voluntary organisation and HM Revenue & Customs is satisfied that itis reasonable for the claimant to provide the service free of charge.

It also does not apply where the service is provided by a claimant who is participating in anemployment or training programme.