Income Tax: Taxation of new social security benefits
Published 15 March 2023
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Who is likely to be affected
Individuals who are in receipt of new payments introduced by the devolved administrations, which are taxable as social security income.
General description of the measure
This measure introduces a new power to enable the tax treatment of new or new top-up welfare payments, introduced by the devolved administrations, to be confirmed as social security income through secondary legislation.
Policy objective
The objective of this measure is to introduce a new power to clarify the tax treatment of new, or new top-up, welfare payments introduced by the devolved administrations as social security income through secondary legislation, by statutory instrument.
This will allow the UK government to confirm the tax treatment of new, or new top-up, payments introduced by the devolved administrations within the tax year, rather than be subject to the UK parliamentary timetable.
Background to the measure
New, or new top-up, welfare payments are administered by a number of different UK government departments and the devolved administrations.
The tax treatment of these payments are legislated for in Income Tax legislation. The tax treatment of new benefits needs to be confirmed when each one is introduced.
Detailed proposal
Operative date
The measure will come into force on Royal Assent of Spring Finance Bill 2023.
Current law
The Income Tax treatment of social security benefits is legislated for in Part 10 of the Income Tax (Earnings and Pensions) Act 2003 (ITEPA 2003).
Section 660 of ITEPA 2003 details the taxable UK benefits in Table A.
Section 677 of ITEPA 2003 details the UK social security benefits wholly exempt from Income Tax in Table B.
Proposed revisions
This measure will introduce a new power to add new benefits to Table A in ITEPA 2003, confirming they are taxable as social security income by secondary legislation. This power is intended for use on new benefits introduced by the devolved administrations.
Summary of impacts
Exchequer impact (£m)
| 2022 to 2023 | 2023 to 2024 | 2024 to 2025 | 2025 to 2026 | 2026 to 2027 | 2027 to 2028 |
|---|---|---|---|---|---|
| — | Negligible | Negligible | Negligible | Negligible | Negligible |
This measure is expected to have a negligible impact on the Exchequer.
Economic impact
This measure is not expected to have any significant macroeconomic impacts.
Impact on individuals, households and families
This measure will impact those individuals who are in receipt of a payment introduced by the devolved administrations, which is taxable as social security income by clarifying or amending the tax treatment of future payments. Individuals will not need to do anything differently to what they do now.
This measure is not expected to impact on family formation, stability or breakdown.
This measure is not expected to impact on individual’s experience of dealing with HMRC as they do not need to report anything to HMRC.
Equalities impacts
It is not expected that there will be adverse effects on any group sharing protected characteristics.
Impact on business including civil society organisations
There is no impact on businesses or civil society organisations as this measure only affects individuals.
Operational impact (£m) (HMRC or other)
The operational impacts of this policy are negligible. There are no information technology impacts associated with delivering this measure and it is expected only guidance changes will be required.
There are no financial consequences for HMRC.
Other impacts
Other impacts have been considered and none have been identified.
Monitoring and evaluation
This measure will be monitored through information collected from tax receipts.
Further advice
If you have any questions about this change, email the Income Tax Structure Team at: [email protected].