Income Tax (Earnings and Pensions) Act 2003 section 664

Short-term incapacity benefit not payable at the higher rate

Section 664 limits the income tax charge on short-term incapacity benefit so that only benefit paid at the higher rate is taxable.

• Short-term incapacity benefit is exempt from income tax unless it is payable at the higher rate.
• The higher rate applies after the first 196 days of a period of incapacity for work.
• The definitions of both the benefit and its higher rate are drawn from social security legislation (sections 30A and 30B of SSCBA 1992 or the corresponding Northern Ireland provisions).
• This section clarifies earlier legislation to confirm the long-standing policy and practice that incapacity benefit is taxable, resolving a technical conflict between older statutory provisions.