3. Tax-free and taxable state benefits

State benefits that are taxable

The most common benefits that you pay Income Tax on are:

  • the State Pension
  • Jobseeker’s Allowance
  • Carer’s Allowance
  • Employment and Support Allowance (contribution based)
  • Incapacity Benefit (from the 29th week you get it)
  • Bereavement Allowance
  • pensions paid by the Industrial Death Benefit scheme
  • Widowed Parent’s Allowance
  • Widow’s pension

Tax-free state benefits

The most common state benefits you don’t have to pay Income Tax on are:

  • Housing Benefit
  • Employment and Support Allowance (income related)
  • Income Support - though you may have to pay tax on Income Support if you’re involved in a strike
  • Working Tax Credit
  • Child Tax Credit
  • Disability Living Allowance
  • Child Benefit (income based - use the Child Benefit tax calculator to see if you’ll have to pay tax)
  • Guardian’s Allowance
  • Attendance Allowance
  • Pension Credit
  • Winter Fuel Payments and Christmas Bonus
  • free TV licence for over-75s
  • lump-sum bereavement payments
  • Maternity Allowance
  • Industrial Injuries Benefit
  • Severe Disablement Allowance
  • Universal Credit
  • War Widow’s Pension
  • Young Person’s Bridging Allowance