Income Tax (Earnings and Pensions) Act 2003 section 658

Amount charged to tax

Section 658 explains how to calculate the amount of social security income that is subject to income tax for a given tax year, including the deduction available for payroll giving.

• The taxable amount for each social security benefit is calculated individually as "net taxable social security income" using the formula: taxable social security income minus any payroll giving deduction.
• For certain specified benefits — including bereavement allowance, carer's allowance, carer's allowance supplement, contributory employment and support allowance, incapacity benefit, income support, and related Northern Ireland welfare supplementary payments — the taxable social security income is determined under separate rules in section 661.
• For all other taxable UK social security benefits listed in Table A, the taxable social security income is simply the full amount of the benefit that is chargeable to tax; for foreign benefits covered by section 678, the amount is determined under section 679.
• Any social security income that qualifies as exempt income must be excluded when determining the taxable amount.