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, 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 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.
Last reviewed/updated 3 July 2018