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Tax exemption for social security payments

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The Income Tax (Exemption of Social Security Benefits) Regulations, SI 2022/529, amend ITEPA 2003 Pt 10 Ch 5 to exempt the following three social security payments from income tax, with retrospective effect:

  • the Scottish government’s adult disability payments (ADP) (the exemption has effect for 2021/22 onwards);
  • discretionary fund payments (the exemption has effect for 2021/22 onwards); and
  • household support fund (HSF) payments (the exemption has effect for 2020/21 onwards).

ADP replaces personal independence payments and adult disability living allowance in Scotland and is being phased in from 21 March 2022, with full rollout expected by August 2022.

Discretionary fund payments are amounts paid by local authorities to help certain households with rising energy bills.

The household support fund was set up in October 2020 to help support vulnerable households as part of the UK’s recovery from the covid-19 pandemic.

The discretionary fund and household support exemptions also apply to schemes set up by the devolved administrations.

Issue: 1576
Categories: News