Income Tax (Earnings and Pensions) Bill

House of Commons

Session 2002 - 03
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Other Bills before Parliament

Income Tax (Earnings and Pensions) Bill

Income Tax (Earnings and Pensions) Bill
Part 10 — Social security income
Chapter 4 — Taxable UK social security benefits: exemptions
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661   Taxable social security income
     (1)    This section applies in relation to each of the following taxable benefits listed
in Table A—
                    carer’s allowance, bereavement allowance,
                    incapacity benefit, and
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                    income support.
     (2)    The amount of taxable social security income for a taxable benefit for a tax year
is the full amount of the benefit accruing in the tax year irrespective of when
any amount is actually paid.
662   Person liable for tax
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The person liable for any tax charged under this Part on a taxable benefit listed
in Table A is the person receiving or entitled to the benefit.
Chapter 4
Taxable UK social security benefits: exemptions
Incapacity benefit
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663   Long-term incapacity benefit: previous entitlement to invalidity benefit
     (1)    No liability to income tax arises on long-term incapacity benefit if—
           (a)           a person is entitled to the benefit for a day of incapacity for work which
falls in a period of incapacity for work which is treated for the purposes
of that benefit as having begun before 13th April 1995, and
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           (b)           the part of that period which is treated as having fallen before that date
includes a day for which that person was entitled to invalidity benefit.
     (2)    In this section—
                    “invalidity benefit” means invalidity benefit under—
                  (a)                 Part 2 of SSCBA 1992, or
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                  (b)                 Part 2 of SSCB(NI)A 1992;
                    “long-term incapacity benefit” means incapacity benefit payable under—
                  (a)                 section 30A(5), 40 or 41 of SSCBA 1992, or
                  (b)                 section 30A(5), 40 or 41 of SSCB(NI)A 1992.
664   Short-term incapacity benefit not payable at the higher rate
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     (1)    No liability to income tax arises on short-term incapacity benefit unless it is
payable at the higher rate.
     (2)    In this section—
           (a)           “short-term incapacity benefit” means incapacity benefit payable
under—
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                  (i)                 section 30A(1) of SSCBA 1992, or
                  (ii)                section 30A(1) of SSCB(NI)A 1992;
           (b)           the reference to short-term incapacity benefit payable at the higher rate
is to be construed in accordance with—

Income Tax (Earnings and Pensions) Bill
Part 10 — Social security income
Chapter 4 — Taxable UK social security benefits: exemptions
    311

                  (i)                 section 30B of SSCBA 1992, or
                  (ii)                section 30B of SSCB(NI)A 1992.
Income support
665   Exempt unless payable to member of couple involved in trade dispute
     (1)    No liability to income tax arises on income support unless—
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           (a)           the income support is payable to one member of a married or
unmarried couple (“the claimant”), and
           (b)           section 126 of SSCBA 1992 or section 125 of SSCB(NI)A 1992 (trade
disputes) applies to the claimant but not to the other member of the
couple.
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     (2)    In this section “married couple” and “unmarried couple” have the same
meaning as in section 137(1) of SSCBA 1992 or section 133(1) of SSCB(NI)A
1992.
666   Child maintenance bonus
No liability to income tax arises on a part of income support which is
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attributable to a child maintenance bonus (within the meaning of section 10 of
CSA 1995 or Article 4 of CS(NI)O 1995).
667   Amounts in excess of taxable maximum
     (1)    If the amount of income support paid to a person (“the claimant”) for a week
or a part of week exceeds the claimant’s taxable maximum for that period, no
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liability to income tax arises on the excess.
     (2)    The claimant’s taxable maximum for a period is determined under section 668.
668   Taxable maximum
     (1)    A claimant’s taxable maximum for a week is determined under this subsection
if the applicable amount for the purpose of calculating the income support
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consists only of an amount in respect of the relevant couple.
            The taxable maximum is equal to one half of the applicable amount.
     (2)    A claimant’s taxable maximum for a week is determined under this subsection
if the applicable amount includes amounts that are not in respect of the
relevant couple.
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            The taxable maximum is equal to one half of the amount which is included in
the applicable amount in respect of the relevant couple.
     (3)    A claimant’s taxable maximum for a part of a week is determined as follows—
Step 1
            Assume that the income support is paid to the claimant for the whole of, rather
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than part of, the week.
Step 2
            Determine under subsection (1) or (2) what the claimant’s taxable maximum
for that week would be on that assumption.

Income Tax (Earnings and Pensions) Bill
Part 10 — Social security income
Chapter 4 — Taxable UK social security benefits: exemptions
    312

Step 3
            Determine the claimant’s taxable maximum for the part of the week using this
formula—
            where—
                    N is the number of days in the part of the week for which the claimant is
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actually paid the income support, and
                    TMW is the taxable maximum for the whole week determined under step
2.
669   Interpretation
     (1)    In sections 667 and 668, except in relation to Northern Ireland—
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                    “applicable amount” means the amount prescribed in relation to income
support in regulations made under section 135 of SSCBA 1992;
                    “married couple” and “unmarried couple” have the same meaning as in
section 137(1) of SSCBA 1992.
     (2)    In sections 667 and 668, in relation to Northern Ireland—
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                    “applicable amount” means the amount prescribed in relation to income
support in regulations made under section 131 of SSCB(NI)A 1992;
                    “married couple” and “unmarried couple” have the same meaning as in
section 133(1) of SSCB(NI)A 1992.
     (3)    In section 668 “relevant couple”, in relation to a claimant, means the married or
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unmarried couple of which the claimant is a member.
Jobseeker’s allowance
670   Child maintenance bonus
No liability to income tax arises on a part of a jobseeker’s allowance which is
attributable to a child maintenance bonus (within the meaning of section 10 of
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CSA 1995 or Article 4 of CS(NI)O 1995).
671   Amounts in excess of taxable maximum
     (1)    If the amount of jobseeker’s allowance paid to a person (“the claimant”) for a
week or a part of a week exceeds the claimant’s taxable maximum for that
period, no liability to income tax arises on the excess.
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     (2)    The claimant’s taxable maximum for a period is determined under sections 672
to 674.
672   Taxable maximum: general
     (1)    A claimant’s taxable maximum for a week is determined—
           (a)           under section 673, if the claimant is paid an income-based jobseeker’s
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allowance for that week, or
           (b)           under section 674, if the claimant is paid a contribution-based
jobseeker’s allowance for that week.

Income Tax (Earnings and Pensions) Bill
Part 10 — Social security income
Chapter 4 — Taxable UK social security benefits: exemptions
    313

     (2)    A claimant’s taxable maximum for a part of a week is determined as follows—
Step 1
            Assume that the jobseeker’s allowance is paid to the claimant for the whole of,
rather than part of, the week.
Step 2
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            Determine under section 673 or 674 what the claimant’s taxable maximum for
that week would be on that assumption.
Step 3
            Determine the claimant’s taxable maximum for the part of the week using this
formula—
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            where—
                    N is the number of days in the part of the week for which the claimant is
actually paid the jobseeker’s allowance, and
                    TMW is the taxable maximum for the whole week determined under step
2.
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673   Taxable maximum: income-based jobseeker’s allowance
     (1)    A claimant’s taxable maximum for a week is determined under this section if—
           (a)           the claimant is paid an income-based jobseeker’s allowance for that
week, or
           (b)           the claimant is assumed under section 672(2) to be paid an income-
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based jobseeker’s allowance for that week.
     (2)    If the claimant is not a member of a married or unmarried couple, the
claimant’s taxable maximum for the week is equal to the age-related amount
which would be applicable to the claimant if a contribution-based jobseeker’s
allowance were payable to the claimant for that week.
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     (3)    If the claimant is a member of a married or unmarried couple, the claimant’s
taxable maximum for the week is equal to the portion of the applicable amount
which is included in the jobseeker’s allowance in respect of the couple for that
week.
     (4)    But if—
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           (a)           the claimant is a member of a married or unmarried couple, and
           (b)           the other member of that couple is prevented by section 14 of JSA 1995
or Article 16 of JS(NI)O 1995 (trade disputes) from being entitled to a
jobseeker’s allowance,
            the claimant’s taxable maximum for that week is equal to half the portion of the
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applicable amount which is included in the jobseeker’s allowance in respect of
the couple for that week.
674   Taxable maximum: contribution-based jobseeker’s allowance
     (1)    A claimant’s taxable maximum for a week is determined under this section if—
           (a)           the claimant is paid a contribution-based jobseeker’s allowance for that
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week, or

Income Tax (Earnings and Pensions) Bill
Part 10 — Social security income
Chapter 5 — UK social security benefits wholly exempt from income tax
    314

           (b)           the claimant is assumed under section 672(2) to be paid a contribution-
based jobseeker’s allowance for that week.
     (2)    If the claimant is not a member of a married or unmarried couple, the
claimant’s taxable maximum for the week is equal to the age-related amount
which is applicable to the claimant for that week.
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     (3)    If the claimant is a member of a married or unmarried couple, the claimant’s
taxable maximum for the week is equal to the portion of the applicable amount
which would be included in the jobseeker’s allowance in respect of the couple
if an income-based jobseeker’s allowance were payable to the claimant for that
week.
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675   Interpretation
     (1)    In sections 671 to 674, except in relation to Northern Ireland—
                    “age-related amount” and “applicable amount” mean the amounts
determined as such in accordance with regulations made under section
4 of JSA 1995;
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                    “contribution-based jobseeker’s allowance” and “income-based
jobseeker’s allowance” have the same meaning as in section 1(4) of JSA
1995;
                    “married couple” and “unmarried couple” have the same meaning as in
section 35(1) of JSA 1995.
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     (2)    In sections 671 to 674, in relation to Northern Ireland—
                    “age-related amount” and “applicable amount” mean the amounts
determined as such in accordance with regulations made under Article
6 of JS(NI)O 1995;
                    “contribution-based jobseeker’s allowance” and “income-based
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jobseeker’s allowance” have the same meaning as in Article 3(4) of
JS(NI)O 1995;
                    “married couple” and “unmarried couple” have the same meaning as in
Article 2(2) of JS(NI)O 1995.
Increases in respect of children
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676   Increases in respect of children
No liability to income tax arises on a part of a taxable benefit listed in Table A
which is attributable to an increase in respect of a child.
Chapter 5
UK social security benefits wholly exempt from income tax
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677   UK social security benefits wholly exempt from tax: Table B
     (1)    No liability to income tax arises on the United Kingdom social security benefits
listed in Table B.

TABLE B — PART 1
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Income Tax (Earnings and Pensions) Bill
Part 10 — Social security income
Chapter 5 — UK social security benefits wholly exempt from income tax
    315

BENEFITS PAYABLE UNDER PRIMARY LEGISLATION

Social security benefit
Payable under

Attendance allowance
SSCBA 1992
Section 64

SSCB(NI)A 1992
Section 64

Back to work bonus
JSA 1995
Section 26

5

JS(NI)O 1995
Article 28

Bereavement payment
SSCBA 1992
Section 36

SSCB(NI)A 1992
Section 36

Child benefit
SSCBA 1992
Section 141

SSCB(NI)A 1992
Section 137

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Child’s special allowance
SSCBA 1992
Section 56

SSCB(NI)A 1992
Section 56

Child tax credit
TCA 2002
Part 1

Council tax benefit
SSCBA 1992
Section 131

Disability living allowance
SSCBA 1992
Section 71

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SSCB(NI)A 1992
Section 71

Guardian’s allowance
SSCBA 1992
Section 77

SSCB(NI)A 1992
Section 77

Housing benefit
SSCBA 1992
Section 130

SSCB(NI)A 1992
Section 129

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Industrial injuries benefit (apart
SSCBA 1992
Section 94

from industrial death benefit)
SSCB(NI)A 1992
Section 94

Pensioner’s Christmas bonus
SSCBA 1992
Section 148

SSCB(NI)A 1992
Section 144

Payments out of the social fund
SSCBA 1992
Section 138

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SSCB(NI)A 1992
Section 134

Severe disablement allowance
SSCBA 1992
Section 68

SSCB(NI)A 1992
Section 68

State maternity allowance
SSCBA 1992
Section 35

SSCB(NI)A 1992
Section 35

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State pension credit
SPCA 2002
Section 1

SPCA(NI) 2002
Section 1

Working tax credit
TCA 2002
Part 1

TABLE B — PART 2

Income Tax (Earnings and Pensions) Bill
Part 10 — Social security income
Chapter 6 — Taxable foreign benefits
    316

BENEFITS PAYABLE UNDER REGULATIONS

Social security benefit
Payable under regulations made under

Compensation payments where
CSA 1995
Section 24

child support reduced because
CS(NI)O 1995
Article 17

of a change in legislation

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Payments to reduce under-
WRPA 1999
Section 79

occupation by housing benefit
WRP(NI)O 1999
Article 70

claimants


     (2)    Industrial death benefit is charged to tax under Part 9 (see section 577).
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     (3)    In this section “industrial death benefit” means any benefit payable under—
           (a)           section 94 of, and Part 6 of Schedule 7 to, SSCBA 1992, or
           (b)           section 94 of, and Part 6 of Schedule 7 to, SSCB(NI)A 1992.
Chapter 6
Taxable foreign benefits
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678   Taxable benefits: foreign benefits
     (1)    This section applies to any benefit which is payable under the law of a country
or territory outside the United Kingdom if—
           (a)           it is substantially similar in character to a benefit listed in Table A, and
           (b)           it is payable to a person resident in the United Kingdom.
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     (2)    But this section does not apply to a benefit which is charged to tax under Part
9 (pension income).
679   Taxable social security income
     (1)    If section 678 applies, the taxable social security income for a taxable benefit for
a tax year is the amount on which tax would be chargeable if the benefit were
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chargeable to tax under Case V of Schedule D (see in particular the provisions
of ICTA listed in subsection (2)).
     (2)    Those provisions of ICTA are—
           (a)           sections 65 and 68 (calculation of the amount of the income on which
tax is to be charged in the tax year);
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           (b)           section 584 (relief for unremittable overseas income);
           (c)           section 585 (relief on delayed remittances).
680   Person liable for tax
The person liable for any tax charged under this Part on a benefit to which
section 678 applies is the person receiving or entitled to the benefit.
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