3. Earnings

Your gross earnings plus those of your partner are taken into account in the tax credit assessment. ‘Gross earnings’ means all income before any income tax or national insurance contributions are deducted. It also includes tips, overtime pay, taxable expenses and, ignoring the first £30,000, taxable payments related to the termination of employment such as redundancy pay.1Reg 4 TC(DCI) Regs If you make any contributions to a personal or occupational pension approved by HMRC, these should be disregarded.2Reg 3(7)(c) TC(DCI) Regs The first £100 a week of statutory maternity, adoption, paternity, shared parental pay and parental bereavement pay is disregarded, but payments above this are included.3Reg 4(1)(h) TC(DCI) Regs Statutory sick pay is included in full.4Reg 4(1)(g) TC(DCI) Regs Any payments that are exempt from income tax should generally be ignored for tax credit purposes.

For full details of the way earnings are treated, see CPAG’s Welfare Benefits and Tax Credits Handbook (for subscribers).

 

1     Reg 4 TC(DCI) Regs »

2     Reg 3(7)(c) TC(DCI) Regs »

3     Reg 4(1)(h) TC(DCI) Regs »

4     Reg 4(1)(g) TC(DCI) Regs »