A state benefit is taxable only if the law says so. The taxable ones are mainly benefits that replace earnings or retirement income, such as the State Pension, Carer’s Allowance and New Style Jobseeker’s Allowance and Employment and Support Allowance, while means tested and disability benefits such as Universal Credit, Personal Independence Payment and Pension Credit are tax free. Taxable benefits are paid without tax taken off, so HMRC usually collects the tax through your tax code, through a Simple Assessment or through your Self Assessment return.

How does the law decide which benefits are taxable?

Social security income is taxed under Part 10 of the Income Tax (Earnings and Pensions) Act 2003. Section 660 contains Table A, a closed list of taxable UK benefits. HMRC’s Employment Income Manual at EIM76101 confirms that only the benefits in Table A are taxable as social security income, with a few others, including the State Pension, taxed as pension income under Part 9. Section 677 contains Table B, a list of benefits that are wholly exempt. If a benefit is in neither table, check the specific guidance before assuming it is tax free.

Taxable benefits count towards your total income. That means they use up your Personal Allowance, can push other income into a higher band and are included when working out adjusted net income.

Which benefits are taxable?

The most common taxable benefits listed by HMRC are:

  • the State Pension, including the basic, new and additional State Pension;
  • Carer’s Allowance and, in Scotland, Carer Support Payment;
  • New Style Jobseeker’s Allowance;
  • New Style (contribution based) Employment and Support Allowance;
  • Incapacity Benefit from the 29th week you receive it;
  • Bereavement Allowance and Widowed Parent’s Allowance, which apply to deaths before 6 April 2017;
  • pensions paid under the Industrial Death Benefit scheme;
  • Income Support paid to some people involved in a trade dispute.

Table A also lists Statutory Sick Pay and statutory maternity, paternity, adoption, shared parental, parental bereavement and neonatal care pay. These are paid by employers rather than the state, and HMRC’s guidance at EIM76350 explains that Statutory Sick Pay paid by an employer is charged as employment income through payroll. See Statutory Sick Pay for how employers handle it.

Which benefits are tax free?

The most common tax free benefits include:

  • Universal Credit, Pension Credit and Housing Benefit;
  • Personal Independence Payment, Disability Living Allowance, Attendance Allowance and, in Scotland, Adult Disability Payment;
  • Child Benefit and Guardian’s Allowance;
  • income related Employment and Support Allowance;
  • Maternity Allowance;
  • Bereavement Support Payment and lump sum bereavement payments;
  • Industrial Injuries Benefit, Severe Disablement Allowance and War Widow’s Pension;
  • the Christmas Bonus, Winter Fuel Payment and the free TV licence for over 75s.

Child dependency additions are not taxable even when paid with a taxable benefit. Adult dependency additions follow the main benefit, so they are taxable when added to a taxable benefit (EIM76102).

Where are the traps between similar benefits?

Several pairs of benefits look alike but are treated differently:

Taxable Tax free Why they differ
New Style Jobseeker’s Allowance Universal Credit EIM76220: income based JSA was folded into Universal Credit, which is not taxable; New Style JSA, claimed separately, is taxable
New Style Employment and Support Allowance Income related Employment and Support Allowance EIM76186: the contribution based form is taxable, the means tested form is not
Statutory Maternity Pay Maternity Allowance One is in Table A, the other in Table B

Are Child Benefit and Winter Fuel Payment really tax free?

Both are exempt, but tax can claw them back. If you or your partner has adjusted net income over £60,000, the High Income Child Benefit Charge recovers 1% of the Child Benefit for every £200 over that figure, and all of it once income passes £80,000; see the High Income Child Benefit Charge. For Winter Fuel Payment, if your own total income is over £35,000 HMRC takes the payment back, either by changing your tax code or through your Self Assessment return, where it shows as the Winter Fuel Payment charge. Your partner’s income does not count, and you can opt out of receiving it. Winter Fuel Payment is not paid in Scotland, where separate support applies.

How is tax on taxable benefits collected?

Taxable benefits are paid gross. HMRC uses several routes to collect the tax:

  • Through a tax code. If you also have a job or a private pension, HMRC adjusts the tax code on that income to collect the tax due on the benefit. For pensioners, the private pension provider usually collects the tax due on the State Pension as well. See PAYE tax codes.
  • Through Simple Assessment. If the State Pension is your only income and it exceeds your Personal Allowance, HMRC sends a Simple Assessment bill, explained in Simple Assessment.
  • Through the Department for Work and Pensions. For Jobseeker’s Allowance, the PAYE Manual at PAYE78100 describes a modified form of PAYE: you hand in your P45, the department checks your tax at the end of the claim or at 5 April, any overpayment is repaid, and you get a new P45 when the claim ends. EIM76186 confirms contribution based Employment and Support Allowance is also paid under a modified PAYE system.
  • Through Self Assessment. If you file a return, taxable benefits go on it and any balance is paid with the rest of your tax.

Is all of your Jobseeker’s Allowance taxable?

Not necessarily. EIM76222 explains that the taxable amount is the lower of the amount received and the taxable maximum, which is based on the basic personal allowance within the benefit. Additions for children are not taxed. Benefit is reported for the year it is due, and a week straddling two tax years is split between them.

What does this look like in practice?

Illustration only. Margaret is retired. In 2026 to 2027 she receives State Pension of £12,000, a workplace pension of £6,000 and Attendance Allowance.

  • Attendance Allowance is tax free and is ignored.
  • Her taxable income is £18,000. After the £12,570 Personal Allowance, £5,430 is taxed at 20%, giving £1,086.
  • The State Pension is paid gross, so HMRC gives her workplace pension provider a tax code that collects the whole £1,086 from the workplace pension.

If Margaret had no workplace pension, her State Pension alone would not exceed her Personal Allowance and no tax would be due.

What mistakes do people make?

  • Assuming a benefit is tax free because it is paid without deductions. The State Pension, Carer’s Allowance and New Style benefits are all paid gross but are taxable.
  • Leaving taxable benefits off a tax return. They form part of total income and can change the rate on other income.
  • Not checking the tax code. If a code does not reflect a taxable benefit, an underpayment builds up; if it overstates it, too much is taken.
  • Forgetting the refund after a claim ends. When a JSA claim ends, the end of claim tax check may produce a refund, and claiming tax back after leaving a job covers what to do if it does not.
  • Ignoring clawback charges. The High Income Child Benefit Charge and the Winter Fuel Payment charge can apply even though the benefits themselves are exempt.

For other types of exempt income, see what income is tax free.

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Reviewed by Christine Anderson, Broker, Solar Protect. Last reviewed 8 October 2026. Part of Accountapedia, the Solar Protect guide to UK tax and accounting. This page is general information, not personalised advice.