EIM76222 - Social security benefits: how much jobseeker's allowance is taxable
Part 10 Chapters 3 and 4 ITEPA 2003
Taxation of Jobseeker鈥檚 allowance - from 1996
Jobseeker鈥檚 allowance (JSA) is taxable regardless of whether someone is entitled to contribution based JSA or income based JSA. There are special rules for deciding how much of the JSA someone receives is taxable.
The amount of JSA that is taxable is the lower of:
- the amount the person receives and
- the taxable maximum.
The amount of the taxable maximum depends on whether someone is claiming as a single person or as a couple.
Single person
The taxable maximum is the basic personal allowance that person would receive if he or she qualified for contribution based JSA.
Couple
The taxable maximum is the basic personal allowance that person would receive if he or she was entitled to income based JSA. The JSA paid is the taxable income of the person who makes the claim even if she or he receives extra benefit for their husband, wife, civil partner or as a couple.
Example 1
A woman aged 21 lives alone with her six year old child. She has never paid National Insurance contributions and qualifies for income based JSA. During 2002/03 she receives a total of 拢87.45 per week made up as follows:
| Item | Amount |
|---|---|
| Basic JSA personal allowance for a lone parent aged 21 | 拢53.95 |
| Premium for dependent child | 拢33.50 |
| Total | 拢87.45 |
触鈥攟
The taxable maximum is the basic personal allowance she would have received had she qualified for contribution based JSA, which is 拢53.95. As this is less than the amount of benefit she actually receives, her taxable benefit is 拢53.95 per week.
Example 2
A man lives with his wife (both are aged 30) and six year old child and qualifies for contribution based JSA. During 2002/03 he receives a total of 拢118.15 per week made up of:
| Item | Amount |
|---|---|
| Basic JSA personal allowance for a couple | 拢84.65 |
| Premium for dependent child | 拢33.50 |
| Total | 拢118.15 |
The taxable maximum is the basic personal allowance he would have received had he qualified for income based JSA, which is 拢84.65. As this is less than the amount of benefit he receives, his taxable benefit is 拢84.65 per week.
Universal Credit and New Style Jobseeker鈥檚 allowance - from 2013
From 2013, income based JSA has been consolidated (along with a number of other social security benefits) into a new payment called Universal Credit. Universal Credit is not taxable.
Contribution based Jobseeker鈥檚 Allowance has been replaced with New Style Jobseeker鈥檚 Allowance, which is claimed separately from Universal Credit. New Style Jobseeker鈥檚 Allowance is taxable as social security income.