SolvedEIM76222 | Social security benefits: how much jobseeker's allowance is taxable
From HM Revenue & Customs · Employment Income Manual
Part 10 Chapters 3 and 4 ITEPA 2003
Taxation of Jobseeker’s allowance - from 1996
Jobseeker’s 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 £87.45 per week made up as follows:
| Item | Amount |
|---|---|
| Basic JSA personal allowance for a lone parent aged 21 | £53.95 |
| Premium for dependent child | £33.50 |
| Total | £87.45 |
|—|
The taxable maximum is the basic personal allowance she would have received had she qualified for contribution based JSA, which is £53.95. As this is less than the amount of benefit she actually receives, her taxable benefit is £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 £118.15 per week made up of:
| Item | Amount |
|---|---|
| Basic JSA personal allowance for a couple | £84.65 |
| Premium for dependent child | £33.50 |
| Total | £118.15 |
The taxable maximum is the basic personal allowance he would have received had he qualified for income based JSA, which is £84.65. As this is less than the amount of benefit he receives, his taxable benefit is £84.65 per week.
Universal Credit and New Style Jobseeker’s 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’s Allowance has been replaced with New Style Jobseeker’s Allowance, which is claimed separately from Universal Credit. New Style Jobseeker’s Allowance is taxable as social security income.