• Posted 11th March 2015

Non Taxable Incomes in the UK

In the previous blog, we had mentioned about the taxable income and it’s types. Now, we will be giving you insight about the non-taxable incomes where you can ignore the taxes. If you do not want to include non-taxable incomes in your tax calculations, it is important you know about them.

What is non-taxable income or tax free income?

Non taxable income is a income exempted from taxation by law. So, this type of income is not subjected for any tax purposes. Welfare benefits These benefits are non-taxable so you do not have to pay taxes for them. They are as follows:

• Attendance Allowance
• Bereavement Payment
• Child Benefit(income based - use the Child Benefit tax calculator to see if you’ll have to pay tax)
• Carer’s Allowance, Incapacity Benefit, State Retirement Pension, Widowed Parent’s Allowance and Guardian’s Allowance
• Child Tax Credit
• Cold Weather Payments
• Council Tax Reduction
• Employment and Support Allowance i.e. income related
• Housing Benefit
• Industrial Injuries benefits including Disability Benefit, Reduced Earnings Allowance, Constant Attendance Allowance and Exceptionally Severe Disablement Allowance if claimed before April 2001
• One-parent Benefit which is only available if your claim was made before April 1997
• Pension Credit
• Personal Independence Payment
• Return to Work Credit
• Budgeting loans, funeral expenses payments and sure start maternity grants
• Universal Credit
• War Disablement Pension, including allowances
• War Widow’s/Widower's pension
• Winter Fuel Payments and Christmas Bonus

Interest from savings and investments Interest from various types of savings and investments is tax free. Take a look at them.

• Child Trust Fund
• National Savings and Investment (NS&I) Certificates
• Individual Savings Accounts (ISAs) Tax Reserve Certificates
• Withdrawn amount from insurance policies and investment of up to 5% of the invested amount

Other sources of income Apart from the welfare benefits and interest from savings and investments, there are other types of income where tax can be avoided. They include:

• Adoption allowances paid by an approved adoption agency
• Childcare vouchers up to a value of £55 per week
• Work-related training courses
• Educational grants and student loans, parental contribution and scholarships
• Education Maintenance Allowance
• Additional pensions paid to the Victoria Cross and George Cross holders
• House funding from Local Authority
• Interest on compensation or damages for personal injuries up to the time granted by a court
• Jurors’ financial loss allowance, if an employee
• Life assurance policies including bonuses and profits
• Long service awards to employees after 20 years of service, where the a tangible gift does not exceed £50 for each year of service
• Disability pensions
• Lump sum pension payments
• Interest for mis-sold personal pensions taken out between 29 April 1988 and 30 June 1994 inclusive
• Benefits paid under mortgage protection insurance, permanent health insurance, payment protection (creditor) insurance and long-term care insurance
• Strike pays from trade unions
• Premium bond prizes
• Free TV licence payment for the over 75s

Next time when you are calculating your tax, make sure to see this list of non-taxable incomes to avoid tax on these incomes. About Phoenix Tax Accountants We are an accountancy firm specializing in accounting, audit, VAT and tax services for the medical professionals in Phoenix Tax Accountants. For more details about what our London accountants can do for you, you can send us email at info@phoenixtaxaccountancy.co.uk.