4. Benefits
Generally, benefits that are not taxable are disregarded when calculating tax credits, and benefits that are taxable are included. For full details of the way social security benefits are treated, see CPAG’s Welfare Benefits and Tax Credits Handbook (for subscribers). Benefits taken into account in full include:
•carer’s allowance (CA);
•carer support payment;
•contribution-based jobseeker’s allowance (JSA);
•contributory employment and support allowance (ESA);
•long-term incapacity benefit (except pre-1995 awards);
•increases for a child or adult dependant paid with any of the above benefits.
Benefits completely disregarded include:1Reg 7(3) TC(DCI) Regs •adult disability payment;
•bereavement support payment;
•Best Start grant;
•CA supplement and young carer grant;2The Tax Credits and Childcare (Miscellaneous Amendments) Regulations 2018 No.365 •child benefit;
•child disability payment;
•disability living allowance;
•personal independence payment;
•income-related ESA;
•guardian’s allowance;
•housing benefit;
•income support (except to strikers);
•income-based JSA;
•industrial injuries disablement benefit;
•maternity allowance;
•funeral support payments;
•most war pensions;3Reg 5 TC(DCI) Regs •increases for a child or adult dependant paid with any of the above benefits;
•Scottish child payment.
Benefits partly disregarded include state retirement pension (and private and occupational pensions) and widowed parent’s allowance. These are included in tax credit calculations, although the first £300 of the total income from pensions, income from capital, and foreign income is disregarded.