Income Tax (Earnings and Pensions) Act 2003 section 671

Amounts in excess of taxable maximum

Section 671 limits the amount of jobseeker's allowance (and any relevant welfare supplementary payments) that is subject to income tax by introducing a "taxable maximum" for each payment period.

• Where jobseeker's allowance and relevant welfare supplementary payments paid for a week or part-week exceed the claimant's taxable maximum, no income tax is due on the excess
• The taxable maximum is calculated using the rules set out in sections 672 to 674, which distinguish between income-based and contribution-based allowances
• For couples, the taxable maximum is based on what would have been payable as an income-based allowance, even if the claimant actually receives a contribution-based allowance
• The rules account for special circumstances including amounts attributable to other people, claimants involved in industrial action, and allowances paid for periods shorter than a full week