Stupid Question

CurryKing_2

Are benefits taxable???

i.e if someone who earns a substantial amount from Incapacity benefit and Disabled Person Benefit for example. Would they have have to pay tax if it reaches the relevant threshold???

Many thanks in advance

Neil

Debbie_Hobdell

No, it's not a stupid question - and judging from the lack of replies, not one that anyone else can answer just yet!

lisyloo

JSA
(job seekers allowance) is taxable.

lisyloo

Incapacity benefit is taxable

http://www.inlandrevenue.gov.uk/pdfs/ir144.htm

I couldn't find anything on disabled person benefit.
Do you mean disabled persons tax credit?

Paul_Varjak

1. Incapacity Benefit is taxable (unless you were in receipt of Invalidity Benefit prior to 13th April 1995)
2. Income support is not taxable (including the various premiums - Disability Premium and the Carers Premium)
3. DLA is not taxable (neither care nor mobility components)
4. Attendance Allowance is not taxable.


If you get Incapacity Benefit I don't think you will get either JSA or Disabled Persons' Tax Credit that LISYLOO refers to.

Fran

1. Incapacity Benefit is taxable (unless you were in receipt of Invalidity Benefit prior to 13th April 1995)
2. Income support is not taxable (including the various premiums - Disability Premium and the Carers Premium)
3. DLA is not taxable (neither care nor mobility components)
4. Attendance Allowance is not taxable.


If you get Incapacity Benefit I don't think you will get either JSA or Disabled Persons' Tax Credit that LISYLOO refers to.

Thanks Paul and lisyloo, I wasn't sure and couldn't find the info, was hoping someone would come up with the answer.

One thing though - as you can do "permitted work" while on Incapacity Benefit, this could then entitle you to Working Tax Credit if you are working 16 hours per week or more. (DPTC is the old term that went alongside WFTC, now everyone who is entitled receives Working Tax Credit, with a disability or severe disability element if applicable).

Paul_Varjak

FRAN:

You can do permitted work whilst claiming Incapaity Benefit:

1. Work UNDER 16 hours per week and earn up to £72.00 for 26 weeks (52 weeks in some cases) OR

2. You can work over 16 hours/week provided you earn less than £20/week (but that would mean you are getting under the minimum wage) OR

3. Under 'Suppoprted Permitted Work' you can work and earn up to £72/week for an unlimited period. I guess that this would be less than 16 hours/week otherwise you would be getting less than the minimum wage!

So I don't think it likely that you would get Incapacity Benefit and a Workng Tax Credit as well.

Fran

Paul,

It is possible to earn £72 per week @ £4.50 an hour (16 hours) and be entitled to Tax Credits. I just tried this on the Inland Revenue calculator to check. If you have children this would also alter your situation as you would be able to have more income during Tax Credit assessment.

It is possible to get Incapacity Benefit and Working Tax Credit, every individual should check their own situation.

See the Jobcentreplus Website where it states that you can be on Incapacity Benefit and claim Working Tax Credit .

Paul_Varjak

FRAN said:

See the Jobcentreplus Website where it states that you can be on Incapacity Benefit and claim Working Tax Credit

That is not what the site says. What it says is you can qualify for the Disabled Persons' Tax credit if you are currently in receipt of Incapacity Benefit and start to work at least 16 hours/week on average.

The purpose of the Disabled Person's Tax Credit is that it replaces Incapacity Benefit as an incentive to start work. The incentive is not that you will receive both!

As soon as you work 16 hours/week or more you are no longer entitled to Incapacity Benefit but you are entitled to Disabled Persons Tax Credit.

Now, I'm not sure what happens if you work 16 hours or more but earn less than £20/week. My guess is that you will get Incapacity Benefit but not Disabled Persons Tax Credit as any work paying less than the minimum wage would not be classed as 'work'.

It is no coincidence that 16 hours at the minimum wage of £4.50p/hour = £72.00 - which is very close to the Incapacity Benefit (£72.15p/week).

I realise that DPTC is now absorbed into Working Tax Credit but I guess the disabled element of the Working Tax Credit has similar rules to DPTC. I don't know about the other elements of Working Tax Credit as they do not apply to me.

janiewai

Carers Allowance is taxable, they also take it into account when applying for CTC/WTC/HB/CTB which stinks to me as we are saving the governement thousands caring for the disabled person at home all for a measly £44.50 a week :-(

Paul_Varjak

Carers Allowance is taxable, they also take it into account when applying for CTC/WTC/HB/CTB which stinks to me as we are saving the governement thousands caring for the disabled person at home all for a measly £44.50 a week :-(

If you are on Income Support yourself and look after someone else who is disabled you don't get the Carers Allowance, though you do get the Carers Premium added to your Income Support. But this is only £25.55p for a minimum 35 hours/week care.

That is 73p/hour at most, compared to the minimum wage of £4.50p/hour!

Anyway, at least it is tax free!