Commentary

E2.231 Tax credits—the calculation of income

Personal and employment tax

E2.231 Tax credits—the calculation of income

E2.231 Tax credits—the calculation of income

The calculation of income of a claimant (or, in the case of a joint claim, the aggregate income of the claimants) for a tax year for the purposes of TCA 2002, Pt 1 (ss 1–48) is set out in SI 2002/2006 and is summarised below. For the HMRC guidance, see TCTM04001. Most definitions are based broadly on the income tax rules, but there are some important differences. HMRC guidance can be found at TCTM04000 and Working Sheet TC825. There are several 'general disregards' in calculating income, see E2.235.

Note that new claims for tax credits are not possible and the universal credit must be applied for instead. Changes in circumstances of a claimant will also trigger migration of the claim to the universal credit system. See E2.101.

Step One

Calculate and then add together the following incomes of the claimant, or, in the case of a joint claim, of the claimants1:

  1.  

    (a)     Pension income—in calculating the income, any payment or benefit mentioned in Column 1 of Table 2 of SI 2002/2006, reg 5 is disregarded to the extent specified in the corresponding Column 2 entry. These items include war pensions and related allowances, pensions paid where employment ceased due to disability and lump sums provided under certain pension schemes. Any amount deductible for income tax purposes in computing pension income (as defined in ITEPA 2003) under ITEPA 2003, s 713 (donations to charity under the payroll deduction scheme) is deducted from the amount of pension income

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