I have a client who has an award letter for Incap for £100.75pw, which includes a dependents allowance. He is also in reciept of Income Support for him and his family.

However, the letter also states that "From this amount we are deducting the amount of 90p per week in accordance with your tax code of 474L".

Have I missed something somewhere...................

I think they have Mike. IB is taxable:

"CHAPTER 3
TAXABLE UK SOCIAL SECURITY BENEFITS
660 Taxable benefits: UK benefits – Table A

(1) This is Table A-


TABLE A
TAXABLE UK BENEFITS

Social security benefit
Payable under

Bereavement allowance
SSCBA 1992
SSCB(NI)A 1992
Section 39B
Section 39B

Carer's allowance
SSCBA 1992
SSCB(NI)A 1992
Section 70
Section 70

Incapacity benefit
SSCBA 1992
SSCB(NI)A 1992
Section 30A(1) or (5), 40 or 41
Section 30A(1) or (5), 40 or 41

Income support
SSCBA 1992
SSCB(NI)A 1992
Section 124
Section 123

Jobseeker's allowance
JSA 1995
JS(NI)O 1995
Section 1
Article 3

Statutory adoption pay
SSCBA 1992
Section 171ZL

Any provision made for Northern Ireland which corresponds to section 171ZL of SSCBA 1992

Statutory maternity pay
SSCBA 1992
SSCB(NI)A 1992
Section 164
Section 160

Statutory paternity pay
SSCBA 1992
Section 171ZA or 171ZB

Any provision made for Northern Ireland which corresponds to section 171ZA or section 171ZB of SSCBA 1992

Statutory sick pay
SSCBA 1992
SSCB(NI)A 1992
Section 151
Section 147.

(2) A benefit listed below is not "social security income" or a "taxable benefit" if it is charged to tax under another Part of this Act-

statutory adoption pay;
statutory maternity pay;

statutory paternity pay;

statutory sick pay."



EXCEPT


"Increases in respect of children
676 Increases in respect of children

No liability to income tax arises on a part of a taxable benefit listed in Table A which is attributable to an increase in respect of a child."

All quoted from Income Tax (Earnings and Pensions) Act 2003

DWP just can't read, but as it's section 660 maybe you can't blame them for falling asleep before they reached that bit.

Thanks Andrew,

I think I'm becoming depressed again ...never mind, it's Friday soon, and 'er indoors has lots of nice bits of theraputic DIY for me .......

You and me both Mike. Just come out of a meeting with our LA and (inevitably, but it just shouldn't be inevitably) the subject of tax credits came up.

They don't understand them, we don't understand them, and the IR certainly don't. They said look if you do start to understand them can you come and explain them to us please.

I hope it's a nice weekend for your DIY. Hammers are very therapeutic aren't they?

I wonder if its actually the adi that's taken it over the income tax threshold rather than any cdi's ? adi's are taxable.

£66.15 (short term higher) + £34.60 (adi) = £100.75