Tax Credits: Disregarded income

Income which arises outside the UK and is ‘unremittable’ for the purposes of ITTOIA, Part 8, Chapter 4, is disregarded for tax credits.

Income is ‘unremittable’ where

it cannot be transferred to the UK because of the laws of the territory where the income arises, the executive action of its government, or the fact that it is impossible to obtain currency there that can be transferred to the UK, and
the claimant has not converted it into any other currency which is capable of being transferred to the UK.

The following types of income are also disregarded:

New Deal 50+ employment credit under Employment and Training Act 1973, s 2(2) or Northern Ireland equivalent;
A payment under section 15 of the Disabled Persons (Employment Act) 1944, or section 2 of the Employment and Training Act 1973, or their Northern Ireland equivalents, to assist disabled persons to obtain or retain employment;
A mandatory top-up payment made under or pursuant to arrangements made under section 2 of the Employment and Training Act 1973 (or Section 1 of the Employment and Training Act (Northern Ireland 1950) in respect of the claimant’s participation in certain employment programmes or the Intensive Activity Period of the New Deal Pilots for 25 plus and Northern Ireland equivalents or the Backing Young Britain programme or under a written arrangement entered into between the Secretary of State and the person who has arranged for the claimant's participation in the Intensive Activity Period of the New Deal for 25 plus and which is made in respect of his participation in that Period; or the Department for Employment and Learning and the person who has arranged for the claimant's participation in the Preparation for Employment Programme and which is made in respect of the claimant's participation in the Programme[; or the Steps to Work Programme specified in regulation 75(1)(a)(vi) of the Jobseeker’s Allowance Regulations (Northern Ireland) 1996, but only to the extent that the payment is not taxable as a profit of a trade, profession or vocation;
A discretionary payment for special needs on the Full-Time Education and Training Option of the New Deal (under section 2 of the Employment and Training Act 1973, or Northern Ireland equivalent);
An education maintenance allowance under regulations made under section 518 of the Education Act 1996, or a payment in respect of a course of study attended by a child or qualifying young person payable under regulations made under section 518 of the Education (Scotland) Act 1980, section 12(2)(c) of the Further and Higher Education (Scotland) Act 1992, or articles 50,51 or 55(1) of the Education and Libraries (Northern Ireland) Order 1986;
A training premium, discretionary payment or arrears of subsistence paid as a lump sum made by an employment zone contractor for a claimant’s participation in the employment zone programme;
An amount of income equal to any qualifying maintenance payment within section 347B of ICTA 1988;
Any payment by way of qualifying care receipts to the extent that they qualify for qualifying care relief under Chapter 2 of Part 7 of ITTOIA 2005;
Any payment of maintenance, whether under a court order or not, by the claimant’s former partner, or claimant’s partner’s former partner, or the absent parent of a child or qualifying young person where the child or young person is a member of the claimant’s household;
An adoption allowance or other payment for a child or qualifying young person who is a member of the claimant’s household which is exempt from income tax under sections 744 to 746 of ITTOIA 2005;
Any payment by a local authority in respect of a child or qualifying young person who is a member of the claimant’s household under para 15(1) of Sch 1 of the Children Act 1989 (local authority contribution to child maintenance) or by way of special guardianship services under regulations made under section 14F(1)(b) of the Children Act 1989, or equivalent payment by a Northern Ireland authority;
NHS travelling expenses, and equivalent payments in Scotland, Wales and Northern Ireland;
certain payments to assist with prison visits;
Community Care direct payments;
Payments under the ‘Supporting People’ programme;
Payments or vouchers for a former asylum seeker or their dependants;
Trade union provident benefits (section 467(2) of ICTA 1988);
Any payment of expenses made to a volunteer or charity or voluntary sector worker who is not remunerated by the organisation and is not treated as remunerated under reg 17 of the Income Regulations;
Travelling expenses, living away from home allowance or training grant, or child care expenses reimbursed to the claimant as a result of their involvement in certain government training programmes or attends a course at an employment rehabilitation centre, if the payment is not taxable as a profit of a trade, profession or vocation;
A discretionary payment to meet the claimant’s special needs in attending a course while receiving jobseeker’s allowance, if not already disregarded in calculating the claimant’s student income;
A career development loan which is for anything other than living expenses;
A payment in respect of a person whom the claimant or claimant’s partner are caring for temporarily, made by a health authority, a local authority (or an authority under the Children (Northern Ireland) Order 1995), a voluntary organisation, primary care trust or the person themselves, or in Northern Ireland a training school, if exempt from income tax or excluded from profits under the rent-a-room scheme (section 791 ff of ITTOIA 2005);
Payments made under an insurance policy against the risk of the claimant being unable to keep up mortgage repayments on their home, or under a regulated or hire-purchase agreement or a conditional sale agreement, but only to the extent that the payments are used to maintain the mortgage repayments or policy premiums, or any buildings insurance maintained as a condition of the mortgage;
Jury or witness payments, but only to the extent that the payment is not compensation for loss of earnings or social security income (see 5.5.4);
A sports award except to the extent that it has been made as a payment of living expenses; however, parts of the award covering the cost of vitamins, minerals or other special dietary supplements to enhance the claimant’s performance, or of accommodation away from home while training or competing, are disregarded.
Armed forces independence payment under the Armed Forces and Reserve Forces (Compensation Scheme) Order 2011.
Any payment made under the Welfare Supplementary Payment (Loss of Disability Living Allowance) Regulations (Northern Ireland) 2016, the Welfare Supplementary Payment (Loss of Disability-Related Premiums) Regulations (Northern Ireland) 2016, Part 2 of the Welfare Supplementary Payments Regulations (Northern Ireland) 2016, or Parts 3 to 5 of the Welfare Supplementary Payment (Loss of Carer Payments) Regulations (Northern Ireland) 2016
Any payment made by the Scottish Ministers to a claimant who is, or who has been, in receipt of carer's allowance under section 70 of the Contributions and Benefits Act (carer's allowance)(10) during the relevant tax year to supplement that allowance.
Any payment in respect of funeral expense assistance which is made by the Scottish Ministers to a claimant who has accepted responsibility for the expenses of a funeral to meet, or help towards meeting, those expenses.
Any payment made by the Scottish Ministers in respect of early years assistance, which is made for the purposes of meeting some of the costs associated with having, or expecting to have, a baby or child in the family.
Any discretionary financial assistance payment which is made by a Scottish local authority to a claimant who is in receipt of housing benefit provided by virtue of a scheme under section 123 of the Contributions and Benefits Act (income-related benefits) to meet, or help towards meeting, a claimant's housing costs.
Any discretionary payment made in respect of the Discretionary Support Regulations (NI) 2016
Any payment made under, or in connection with, the Windrush Compensation Scheme administered by the Home Office
A payment, whether in cash or by way of a voucher, in lieu of free school meals.
A payment in connection with emergency volunteering leave under Schedule 7 to the Coronavirus Act 2020.
Any payment made, in accordance with arrangements made by the Scottish Ministers, to a person to whom an offer of employment has been made, in order to assist that person to retain employment, if (a) that person was, at the date on which the offer of employment was made, at least 16 years of age but had not reached 25 years of age; had not been in employment at any time in the period of 6 months before the date on which that offer was made; and (iii) applies to the Scottish Ministers for assistance under arrangements made under section 2 of the Employment and Training Act 1973(5),within the period of one year beginning with the date on which that offer was made; or if that person was, at the date on which the offer of employment was made, aged at least 16 years of age but had not reached 26 years of age; had been looked after by a local authority on or after that person’s 16th birthday but was at the date that the offer of employment was made no longer looked after by a local authority; and applies to the Scottish Ministers for assistance under arrangements made under section 2 of the Employment and Training Act 1973 within the period of one year beginning with the date on which that offer was made.
Any payment of disability assistance under section 31 of the Social Security (Scotland) Act 2018.
Any payment made in accordance with arrangements made by the Scottish Ministers for, or in connection with, the abuse or neglect of a person whilst that person was a child who was under the care or responsibility of a body, society or organisation in Scotland.
Any payment made by the Scottish Ministers in accordance with regulations made under section 79 of the Social Security (Scotland) Act 2018 to a person in respect of a child for whom that person is responsible.
Any payment of young carer grant made under the Carer’s Assistance (Young Carers Grant) (Scotland) Regulations 2019.
Any payment in respect of short-term assistance given in accordance with section 36 of the Social Security (Scotland) Act 2018.
Any payment of winter heating assistance given in accordance with section 30 of the Social Security (Scotland) Act 2018.
Any payment made by the National Emergencies Trust (a registered charity established on 28th March 2019 with registered charity number: 1182809).
Any payment made under a scheme established by the Secretary of State in accordance with section 10 of the Northern Ireland (Executive Formation etc) Act 2019
A payment, whether in cash or by way of voucher, in lieu of free school meals
Any payment in connection with emergency volunteering leave under Schedule 7 Coronavirus Act 2020
Any payment made under the NHS Test and Trace Self-Isolation Payment Scheme established on 1st September 2020 or the scheme known as the Test and Trace Support Payment scheme established on 28th September 2020 in respect of England or any other scheme established in any part of the United Kingdom for the purpose of providing financial support to people who are required to self-isolate due to coronavirus and cannot work from home
Any payment, made by or on behalf of the Scottish Ministers under Part 5 of the Welfare Food (Best Start Foods) (Scotland) Regulations 2019
Any payment, funded by the Scottish Government, for the purpose of supporting women affected by complications after mesh implant surgery
Any payment, made under the scheme known as the Covid Winter Grant Scheme in respect of England, or any other scheme established by the Northern Ireland Executive, the Scottish Government or the Welsh Government for the purpose of providing financial support to families and vulnerable individuals to assist with the cost of food and utilities over the same period
A payment made under the Covid-19 support scheme: working households receiving tax credits (this covers the £500 one-off payment paid in 2021)
Any payment under the Homes for Ukraine Scheme to a person who is approved to provide accommodation to eligible person(s) under the scheme.
An award of compensation made under the Victims of Overseas Terrorism Compensation Scheme 2012 or any corresponding scheme established under section 47 of the Crime and Security Act 2010.
Any payment for the purpose of compensation by the Post Office or Secretary of State in connection with the failings of the Horizon System or payable following the judgment of Bates and Others v Post Office Ltd.
Any payment by a Scottish local authority to parents as part of the Parental Transitions Support scheme to ease progression into work.
Any payments by a housing association or local authority in England under the Employment Act to a person in social housing as an incentive to start employment.

Last reviewed/updated 13 June 2024

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