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We are currently updating our website for the 2024/25 tax year. Please bear with us for a short while as we do this.

Note: From 6 January 2024, the main rate of class 1 National Insurance contributions (NIC) deducted from employees’ wages reduced from 12% to 10%. From 6 April 2024, that rate is reduced further to 8%, the main rate of self-employed class 4 NIC is reduced from 9% to 6% and class 2 NIC is no longer due. Those with profits below £6,725 a year can continue to pay class 2 NIC to keep their entitlement to certain state benefits. We will include these changes with our updates in the next few weeks.

Updated on 6 April 2024

State benefits

The page lists most state benefits in alphabetical order. Benefits can be taxable or non-taxable.  Under each benefit we indicate if it is taxable or non-taxable, whether it counts as income for tax credit claims and for universal credit claims and provide links to more information about each benefit. Even if a benefit is taxable it does not necessarily mean you will have any tax to pay as that will depend on your other taxable income and any tax allowances you may be entitled to.

wooden scrabble tiles spelling out the word 'BENEFITS'
Kunst Bilder / Shutterstock.com

Content on this page:

State benefits A-B

Adult Disability Payment (Scotland)

Adult disability payment was introduced in Scotland from 2022. It is paid as disability assistance under Scotland social security legislation. It will gradually replace PIP and DLA for adults in Scotland.

It is not taxable and not counted as income for tax credits or universal credit.

More information

Armed forces independence payment

This benefit is for members of the Armed Forces who have been seriously injured as a result of military service since 2005.

It is not taxable and not counted as income for tax credits or universal credit.

More information

Attendance allowance

Attendance allowance is a non-means-tested benefit for those who have reached their state pension age, paid by the Department for Work and Pensions (DWP). It is paid to those who need help with personal care.

It is not taxable and not counted as income for tax credits or universal credit.

More information

Bereavement allowance

Bereavement allowance is paid to people aged 45 or over, but under pension age, without children, whose spouse or civil partner died before 6 April 2017. It is payable for up to 52 weeks.

Bereavement Support Payment may be payable to people under state pension age (when their partner died) whose spouse or civil partner or cohabiting partner died on or after 6 April 2017.

Bereavement allowance is taxable and counts as social security income for tax credits and counts as unearned income for universal credit.

Bereavement payment

A bereavement payment is a one off lump sum payment paid to people whose spouse or civil partner died before 6 April 2017 where they had paid enough national insurance contributions or who died due to their job. The surviving partner must either be under pension age when their spouse died or their deceased spouse must not have been entitled to a state pension when they died.

Bereavement payment is replaced by the bereavement support payment for people whose spouse or cohabiting partner died on or after 6 April 2017.

A bereavement payment is not taxable and does not count as income for tax credits or for universal credit but as it is a one-off lump sum payment it can count as capital for universal credit.

Bereavement support payment

From 6 April 2017, bereavement support payment replaces bereavement allowance, bereavement payment and widowed parents’ allowance. Bereavement support payment is made up by a lump sum payment followed by up to 18 monthly payments. Following a change in the law, bereavement support payment is also available to bereaved cohabiting partners. It is available to people under state pension age when their partner died.

Is consists of a tax-free lump sum of £2,500 for those without children or £3,500 for those with children, followed by a monthly tax-free payment of £100 if you do not have children and £350 if you do. The monthly payments continue for 18 months paid regardless of your age or if you find a new partner and it is not linked to inflation.

Bereavement support payment is not taxable and does not count as income for tax credits. For universal credit, the initial lump sum is disregarded from capital for the first twelve months and the ongoing allowance is disregarded as income.

More information

Budgeting loans

This is part of the social fund and is an interest-free loan from the DWP to help with particular expenses if you are in receipt of certain benefits. Budgeting loans will be replaced by Budgeting Advances if you are claiming universal credit. They will continue to be available to people on existing benefits until all claimants are moved to universal credit.

Budgeting loans are not taxable and do not count as income for tax credits or universal credit.

More information

State benefits C

Carer’s allowance

Carer’s allowance is paid to people who provide care for at least 35 hours per week. The person who is cared for must receive either disability living allowance (middle or higher rate care component), the daily living component of personal independence payment or attendance allowance, constant attendance allowance at or above the normal maximum rate with an industrial injuries disablement benefit, constant attendance allowance at the basic (full day) rate with a war disablement pension, armed forces independence payment, adult disability payment (daily living at the standard or enhanced rate) or child disability payment (middle or highest care rate).

Carer’s allowance is taxable. It counts as social security income for tax credits and counts as unearned income for universal credit.

More information

Carer’s allowance supplement (Scotland only)

Carer’s allowance is paid to people who provide care for at least 35 hours per week to people in receipt of certain disability benefits. The Scottish Government will make two additional payments a year to people who live in Scotland and were entitled to carer’s allowance on specified dates in the year. These payments will effectively see carer’s allowance topped up to the level of jobseeker’s allowance.

Carer’s allowance supplement is taxable. It does not count as income for tax credits or for universal credit.

More information

Carer support payment (Scotland only)

Carer support payment is paid to people in Scotland who are carers. It is being introduced gradually during 2024 and is replacing carer’s allowance. It is paid in addition to carer’s allowance supplement.

Carer support payment is taxable. It counts as social security income for tax credits and as unearned income for universal credit (only up to the maximum of the amount you would receive if you had entitlement to carer’s allowance).

More information

Child benefit

Child benefit is a non-means-tested benefit paid to people who have responsibility for a child (or children) or qualifying young person. It is paid by HM Revenue & Customs (HMRC). Although it is not means tested, from 7 January 2013, if you (or your partner) have adjusted net income of £50,000 or more, you will be subject to a tax charge unless you opt not to receive payments of child benefit.

Child benefit not taxable but you may have to pay a tax charge if your income is above a certain amount. See our high income child benefit charge page for more information.

Child benefit does not count as income for tax credits or for universal credit.

More information

Child tax credit

Child tax credit is a means-tested benefit paid to families who are responsible for a child (or children) or qualifying young person. It is paid by HMRC. Child tax credit replaced support for children in the benefits system and is, itself, being replaced by universal Credit. You can get child tax credit whether or not you work.

Child tax credit is not taxable and does not count as income for tax credits. You cannot get child tax credit and universal credit at the same time.

More information

Child disability payment (Scotland only)

Child disability payment in Scotland is a new payment replacing disability living allowance for children in Scotland. It is payable for young children and people up to age 18 who have a disability or long-term health condition. Families in Scotland currently claiming the equivalent support through DLA are being transferred to the new payment from autumn 2021.

Child disability payment is not taxable and does not count as income for tax credits or for universal credit.

More information

Christmas bonus

This is a one-off amount paid to some benefit claimants at Christmas time.

The Christmas bonus is not taxable and does not count as income for tax credits or for universal credit.

More information

Cold weather payment

Cold weather payments are made to people on qualifying benefits when temperatures fall below a certain point.

The cold weather payment is not taxable and does not count as income for tax credits or for universal credit.

More information

Cost of living payments

The Government announced a series of extra payments through 2022 to 2024 to help with the cost of living for people entitled to certain benefits or tax credits.

Cost of living payments are not taxable and do not count as income for tax credits or for universal credit

More information

Council tax reduction

Prior to 1 April 2013, help with council tax for people on low incomes was given through council tax benefit. This was abolished from 1 April 2013 and instead the funding has been given to Local Authorities to administer their own local council tax reductions schemes. If you qualify, you will get money off your council tax bill.

Council tax reduction is not taxable and does not count as income for tax credits or for universal credit.

More information

State benefits D-F

Disability living allowance

Disability living allowance (or DLA as it is commonly known) was a benefit for those under state who have mobility problems or need personal care. DLA is only available if you’re under 16 in England and Wales. To see what has replaced DLA go to GOV.UK. If you are 16 or over and already get DLA – you can find out if you will continue to receive it on GOV.UK.

Disability living allowance is not taxable and it does not count as income for tax credits or for universal credit.

More information

Discretionary housing payment

A discretionary housing payment is paid by local authorities to help with rent where there is a shortfall of housing benefit.

A discretional housing payment is not taxable and does not count as income for tax credits or for universal credit.

More information GOV.UK : Shelter

Employment and support allowance – new style

New-style employment and support allowance replaces contributions-based employment and support allowance and works in the same way. It is a benefit for people who are found to have limited capability for work because of illness or disability and who have been an employee or self-employed and paid national insurance contributions (or in some cases have national insurance credits), usually in the last two to three years.

Your (or your partner’s) income and savings will not affect how much ‘new style’ employment and support allowance you’re paid.

New-style employment and support allowance is taxable. It is counted as social security income for tax credits and is counted as unearned income for universal credit.

More information GOV.UK : Disability rights UK

Employment and support allowance -contribution based

Contribution-based employment and support allowance is a benefit for people who are found to have limited capability for work because of illness or disability. It replaced incapacity benefit from October 2008. Contribution based employment and support allowance has been replaced by new-style employment and support allowance in most cases.

Contribution-based employment and support allowance is taxable (but see below for income-related employment and support allowance which is not).

Contribution-based employment and support allowance is counted as social security income for tax credits and as unearned income for universal credit.

More information

Employment and support allowance – income-related

Income-related employment and support allowance is a benefit for people who are found to have limited capability for work because of illness or disability. It is paid to people who have not paid enough contributions to claim contribution-based employment and support allowance. It replaced income-support on grounds of disability from October 2008. Income related employment and support allowance has been replaced by universal credit in most cases.

Income-related employment and support allowance is non-taxable (but see above for contribution-based employment and support allowance which is taxable).

Income-related employment and support allowance is not counted as income for tax credits. If you are in receipt of income-related employment support allowance you will automatically be paid maximum working tax credit and child tax credit (note: this does not apply if you get contribution-based employment support allowance or new-style employment and support allowance unless you also get some income-related employment support allowance).

Income-related employment and support allowance is being replaced by universal credit and you cannot receive it at the same times as universal credit.

More information

Funeral payment

This is a payment from the social fund to help with the costs of a funeral. You must receive a qualifying benefit in order to receive it.

The funeral payment is not taxable and it does not count as income for tax credits or for universal credit.

More information

State benefits G - I

Guardian’s allowance

It is a benefit paid by HMRC to people who are looking after a child (or children) whose parents have died or has one surviving parent who is unable to look after the child.

Guardian’s allowance is not taxable and does not count as income for tax credits or for universal credit

More information

Healthy start

People who receive certain benefits can get vouchers for milk, fruit and vegetables from the healthy start scheme.

Healthy start is not taxable and does not count as income for tax credits or for universal credit

More information

Help with health costs

Help with health costs is available to people who receive certain benefits or who are on a low income.

Help with health costs is not taxable and does not count as income for tax credits or for universal credit.

More information is available GOV.UK ; NHS England ; Scotland ; Health costs Wales NHS ; NI Direct.GOV.UK 

Housing Benefit

Housing benefit is paid by the local authority to those on a low income who have to pay rent. Housing benefit will gradually be replaced by universal credit.

Housing benefit is not taxable and does not count as income for tax credits or for universal credit. Housing benefit is gradually being replaced by universal credit . In most cases it is generally not possible to receive housing benefit and universal credit at the same time, although there are some exceptions.

More information

Income support

Income support is paid to people who are not required to work, such as those with very young children and carers. Income support will gradually be replaced by universal credit.

Income support is not taxable unless you are receiving it while involved in a trade dispute in which case it is taxable.

Income support does not count as income for tax credits unless you are involved in a trade dispute, in which case it is counted as income. If you receive income support (non-taxable), you will automatically be entitled to maximum tax credits. Income support is gradually being replaced by universal credit and is generally not possible to claim universal credit and income support at the same time.

More information

Industrial injuries disablement benefit

Industrial injuries disablement benefit is paid if you are disabled as a result of an accident or disease from work.

Industrial injuries disablement benefit is not taxable and does not count as income for tax credits. It does count as unearned income for universal credit but increases where constant attendance is needed or for exceptionally severe disablement do not count as income for universal credit.

More information

State benefits J-R

Jobseeker’s allowance – new style

New-style jobseeker’s allowance is paid to people who are seeking work and who have met the national insurance contribution requirements.

New-style jobseeker’s allowance is taxable. It counts as social security income for tax credits and as unearned income for universal credit.

More information

Jobseeker’s allowance – contribution based

Contribution-based jobseeker’s allowance is paid to people who are seeking work and who have met the national insurance contribution requirements. In most cases this has been replaced by new-style jobseeker’s allowance.

Contribution-based jobseeker’s allowance is taxable and it counts as social security income for tax credits and as unearned income for universal credit.

More information

Jobseeker’s allowance – income based

Income-based jobseeker’s allowance is paid to people who are seeking work and who have a low income.

Income-based jobseeker’s allowance is taxable.

Tax credit rules normally follow the tax treatment in determining whether income is counted or not. Income-based jobseeker’s allowance is the exception and, although it is taxable, it is not counted as income for tax credits. If you receive income-based jobseeker’s allowance, you will generally be entitled to maximum tax credits.

Income-based jobseeker’s allowance is being replaced by universal credit and will form part of the universal credit award. Any excess paid for the same period as a universal credit award, after adjustment for overlapping benefits, is taken into account as unearned income for universal credit.

More information

Maternity allowance

Maternity allowance is paid to people who are pregnant or who have recently had a baby and who do not qualify for statutory maternity pay, for example if they are self-employed.

Maternity allowance is not taxable and is not taken into account as income for tax credits.

Maternity allowance is taken into account as unearned income for universal credit.

More information

Pension credit

Pension credit is a benefit for those who meet certain age requirements and who are on a low income. It can include elements for children and young people up to age 20 who normally live with the claimant and who the claimant is responsible for. It is made up of guarantee credit (which guarantees a minimum amount to live on) and savings credit (which rewards those with modest savings).

Pension credit is not taxable. It is not counted as income for tax credits or for universal credit. If you receive pension credit you may be entitled to the maximum amount of working tax credit and child tax credit.

More information GOV.UK : Age UK

Personal independence payment

Personal independence payment (or PIP as it is commonly known) replaced disability living allowance for working-age claimants from 8 April 2013. Most existing claimants of disability living allowance are gradually moving cross to personal independence payment. There are two components – the daily living component (standard and enhanced rate) and the mobility component (standard and enhanced rate). Personal independence payment is designed to help with the extra costs of disability caused by long-term ill health or disability.

Personal independence payment is not taxable. It does not count as income for tax credits or for universal credit.

More information GOV.UK ; PIP checker ; Disability Rights UK

Reduced earnings allowance

Reduced earnings allowance is paid to people who cannot earn as much as they normally would due to an accident or disease from work.

Reduced earnings allowance is not taxable and does not count as income for tax credits.

Reduced earnings allowance does count as unearned income for universal credit.

More information

State benefits S

Scottish child payment

Scottish child payment started in February 2021 and was gradually rolled out. It is a payment for low-income families in Scotland with children and who are in receipt of a qualifying benefit.

Scottish child payment is not taxable and does not count as income for tax credits or for universal credit.

More information

Severe disablement allowance

Severe disablement allowance was payable to people who were off sick from work for at least 28 weeks. No new claims have been allowed since April 2001.

Severe disablement allowance is not taxable and does not count as income for tax credits.

Any payments of severe disablement allowance count in full as unearned income for universal credit.

More information

State retirement pension

State pension is paid to people who reach their state pension qualifying age. It is based on national insurance contributions. The state pension is taxable, although tax is taken off at the point you receive it.

State retirement pension counts as income for tax credits. The first £300 of pension, property, investment, foreign and notional income is disregarded.

All categories of state retirement pension count in full as unearned income for universal credit. Any deferred state pension is counted in full as notional income for universal credit.

More information GOV.UK ; Age UK

Statutory adoption pay

Statutory adoption pay is paid to employees who adopt a child and who take time off. It can be paid for up to 39 weeks.

Statutory adoption pay is taxable.

The first £100 of weekly statutory adoption pay is disregarded. Anything above this amount counts as income for tax credit purposes.

Statutory adoption pay counts in full and is treated as earned income for universal credit.

More information

Statutory maternity pay

Statutory maternity pay is paid to employees who take time off before and after they have a baby. It is paid for a maximum of 39 weeks.

Statutory maternity pay is taxable.

The first £100 of weekly statutory maternity pay is disregarded. Anything above this amount is taken into account as income for tax credits.

Statutory maternity pay counts in full and is treated as earned income for universal credit.

More information

Statutory parental bereavement pay

In England, Scotland and Wales, Statutory parental bereavement pay is paid to employees for up to 2 weeks where they take time off work due to a child (aged under 18) bereavement or stillbirth after 24 weeks of pregnancy. Statutory parental bereavement leave and pay was introduced on 6 April 2020.

Statutory parental bereavement pay is taxable.

The first £100 of weekly statutory parental bereavement pay is disregarded. Anything above this amount is taken into account as income for tax credits.

Statutory parental bereavement pay counts in full and is treated as earned income for universal credit.

More information

Statutory paternity pay

Statutory paternity pay is paid to employees whose partners have given birth or adopted a child. It is paid for two weeks.

Statutory paternity pay is taxable.

The first £100 of weekly statutory paternity pay is disregarded as income for tax credits. Any amount above this limit counts as income.

Statutory paternity pay counts in full and is treated as earned income for universal credit.

More information

Statutory Shared Parental Pay (ShPP)

Statutory shared parental pay was introduced for babies born or adopted after 5 April 2015. Statutory shared parental pay is linked to shared parental leave which allows parents to share leave in the first year. If you are eligible for shared parental leave and you or your partner end maternity or adoption leave and pay (or maternity allowance) early then you may be able take the rest of the 39 weeks of pay (or maternity allowance up to 37 weeks) as statutory shared parental pay.

Statutory shared parental pay is taxable.

The first £100 of weekly statutory shared parental pay payments is disregarded as income for tax credits. Any amount above this limit counts as income.

Statutory shared parental pay counts in full and is treated as earned income for universal credit

More information GOV.UK ; ACAS

Statutory sick pay

Statutory sick pay (or SSP as it is commonly known) is paid to employees for the first 28 weeks of sick leave.

Statutory sick pay is taxable.

Statutory sick pay counts in full as income for tax credits.

Statutory sick pay counts in full as earned income for universal credit.

More information

Sure start maternity grant

Sure start maternity grant is a payment made to low income families in receipt of certain benefits to help towards the costs of a new baby.

Sure start maternity grant is not taxable.

Sure start maternity grant does not count as income for tax credits or for universal credit.

More information

State benefits U-W

Universal credit

Universal credit was introduced gradually from April 2013. It replaces six other benefits – income-support, income-based jobseeker's allowance, housing benefit, child tax credit, working tax credit and income-related employment and support allowance.

Universal credit is not taxable.

Universal credit is replacing tax credits. It is not possible to get universal credit and tax credits at the same time.

More information

Vaccine damage payment

Vaccine damage payments are paid to people who are severely disabled as a result of vaccination against certain diseases.

The lump sum vaccine damage payment is non-taxable.

The vaccine damage payment is not treated income for tax credit purposes where the beneficiary is a child. Where the child is grown up and makes a claim for tax credits in their own right, any continuing income from a vaccine damage trust would be counted as investment income.

Vaccine damage payments do not appear to be treated as income for universal credit and lump sum payments are not included as capital if they are held in a trust but may be treated as capital if they are invested in some other way.

More information

War disablement pension

This is a pension paid to people injured as a result of service in the armed forces.

War disablement pension is non-taxable.

War disablement pension is not treated as income for tax credits or for universal credit.

More information

War widow’s or widower’s pension

War widow’s or widower’s pension is paid to those whose husband, wife or civil partner died as a result of their service in the armed forces.

War widow’s pension is non-taxable.

War widow’s pension is not counted as income for tax credits or for universal credit.

More information

Welfare Supplementary payments (Northern Ireland)

Welfare Supplementary Payments (WSP) have been introduced in Northern Ireland only to reduce the impact of some welfare changes including the introduction of the benefit cap, changes to employment and support allowance and personal independence payment, loss of disability premiums/elements in certain benefits, loss of carers allowance in some cases, universal credit and changes to housing benefit.

Claimants may be eligible for more than one WSP if applicable. These are awarded automatically and there is no need to claim them.

Whether the payment is taxable depends on what benefit it is replacing – as a general rul if it is replacing a lost taxable benefit (even if it is paid as an addition to a non-taxable benefit), then the payment will be taxable. If it is replacing a benefit that was not taxable, then the WSP will not be taxable.

The tax credit treatment generally follows the tax treatment – if the WSP is taxable it will be counted as income for tax credits.

More information

Widowed parent's allowance

Widowed parent’s allowance is paid to people who receive child benefit for at least one child where their husband, spouse or civil partner died before 6 April 2017. Following a change in the law, WPA is also extended to cover bereaved cohabiting parents.

Widowed parent’s allowance is replaced by Bereavement Support Payment for new claims whose husband, wife or civil partner died on or after 6 April 2017.

Widowed parent’s allowance is taxable.

Widowed parent's allowance is pension income for tax credit purposes. The first £300 of property, pension, investment, foreign and notional income is disregarded.

Widowed parent’s allowance is counted in full as unearned income for universal credit.

Retrospective payments which are made under the terms of the Bereavement Benefits Remedial Order 2023, extending entitlement to co-habiting couples, can affect other benefits and tax credits. Claimants should contact with DWP (or HMRC, for tax credits) to discuss their individual circumstances.

More information

Winter fuel payment

Winter fuel payment is a tax-free amount paid yearly to people who have reached the qualifying age by a certain date. The payments depend on your circumstances but are generally between £100 and £300. It is generally paid automatically if you are in receipt of state pension or certain other benefits. If you have not received your payment by January, or if you are not in receipt of any benefits, then you should contact the Winter Fuel Helpline on 0345 9 15 15 15.

Winter fuel payments are non-taxable.

Winter fuel payments are not counted as income for tax credits or for universal credit.

More information GOV.UK ; Citizens Advice

Working tax credit

Working tax credit is paid by HMRC to people who work and receive a low wage. You do not have to be responsible for a child to get working tax credit.

Working tax credit is not taxable.

Universal credit is gradually replacing working tax credit. It is not possible to claim universal credit and working tax credit at the same time.

More information

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