Are Benefits Taxable?

Are Benefits Taxable?

As an employee, you are entitled to several benefits and your employer may reimburse expenses to you. Not all of these benefits and expenses payments are taxable, however, which is good news for taxpayers. You can ignore non-taxable income for tax purposes and exclude it in your calculation.

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What are some of the benefits you can enjoy without paying tax?

Housing Benefit

Low-income earners who have to pay rent are entitled to the housing benefit, which is paid for by the local authority. Apart from being non-taxable, it is not counted as income for tax credits either.

Employment Support

People who have limited capability to work because of disability or illness are entitled to the income-related employment and support allowance. This is in support to people who cannot claim contribution-based employment and support allowance because of insufficient contributions.

Council Tax Reduction

If you qualify for the local council tax reduction schemes, you can claim off your council tax bill which is non-taxable. It’s not counted as income for tax credits as well.

Universal Credit

Introduced in April 2013, the universal tax credit will replace six other benefits – child tax credit, housing benefit, income-based jobseeker’s allowance, income-related employment and support allowance, income Support, and working tax credit. It is expected to be completely rolled out by 2021. It will also replace tax credits.

Maternity Allowance

Women who did not qualify for statutory maternity pay, such as those who are self-employed, will be paid maternity allowance if they are pregnant or have recently given birth. The pay will not be considered an income when tax credits are calculated.

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Photo by Wiktor Karkocha on Unsplash

 

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