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Hello, I’m Sara, a Chartered Accountant who transitioned into running an online business. I understand just how daunting and confusing it can be to take the leap into self-employment. The questions, the uncertainties, and the steep learning curve are all challenges I’ve faced myself. Whether you’re in the early stages of planning to go self-employed, just dipping your toes into making money on your own terms, or already fully committed, this blog is dedicated to helping you every step of the way. Through detailed guides, expert tips, and practical advice, I aim to be your go-to resource. From mastering financial management and navigating tax obligations to setting up the foundations of your business, I’m here to provide you with the clarity and confidence you need to thrive in your self-employment journey.
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Which UK State Benefits Are Taxable?
Discover which state benefits in the UK are subject to income tax, meaning you may need to pay tax on amounts received that exceed your personal allowance. Also, find out which state benefits are exempt from tax.
Friendly Disclaimer: While I am an accountant, I am not your personal accountant. The information in this article is accurate but is intended for general guidance only. Each individual’s situation is unique, so use your discretion when applying this advice to your circumstances. If you have any doubts or questions, consult a qualified professional to avoid potential penalties.
State Benefits That Are Not Taxable
Here are some common UK state benefits that you do not have to pay income tax on:
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Attendance Allowance
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Bereavement Support Payment
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Child Benefit
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Child Tax Credit
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Disability Living Allowance (DLA)
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TV Licence for Over-75s
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Guardian’s Allowance
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Housing Benefit
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Income Support
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Income-Related Employment and Support Allowance (ESA)
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Industrial Injuries Benefit
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Lump-Sum Bereavement Payments
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Maternity Allowance for the Self-Employed
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Pension Credit
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Personal Independence Payment (PIP)
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Severe Disablement Allowance
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Universal Credit
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War Widow’s Pension
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Winter Fuel Payments and Christmas Bonus
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Working Tax Credit
State Benefits That Are Taxable
Here are the common UK state benefits that are subject to income tax:
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Bereavement Allowance
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Carer’s Allowance
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Contribution-Based Employment and Support Allowance (ESA)
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Incapacity Benefit (from the 29th week onwards)
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Jobseeker’s Allowance (JSA)
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Pensions Paid by the Industrial Death Benefit Scheme
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State Pension
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Widowed Parent’s Allowance
Once your taxable state benefits exceed the personal allowance, you will need to pay income tax. The amount of tax owed will depend on your total taxable income for the tax year, which runs from April 6th to April 5th each year.
Income Tax Bands
Is Universal Credit Taxable?
Universal Credit is not subject to income tax and does not need to be included on your self-assessment tax return.