State benefits taxable and non-taxable

by Aitch, posted in Income Tax

Many people rely on state benefits, but it is not always obvious which payments are taxable and which are tax-free.

HMRC’s guidance outlines the following list of the most common state benefits on which Income Tax is payable, subject to the usual limits:

  • Bereavement Allowance (previously Widow’s Pension)
  • Carer’s Allowance or (in Scotland only) Carer Support Payment
  • Contribution-Based Employment and Support Allowance (ESA)
  • Incapacity Benefit (from the 29th week you receive it)
  • Jobseeker’s Allowance (JSA)
  • Pensions Paid by the Industrial Death Benefit Scheme
  • The State Pension
  • Widowed Parent’s Allowance

The most common state benefits that are not subject to Income Tax include:

  • Attendance Allowance
  • Bereavement Support Payment
  • Child Benefit (income-based – use the Child Benefit tax calculator to see if you’ll have to pay tax)
  • Disability Living Allowance (DLA)
  • Free TV Licence for Over-75s
  • Guardian’s Allowance
  • Housing Benefit
  • Income Support – though you may have to pay tax on Income Support if you’re involved in a strike
  • Income-Related Employment and Support Allowance (ESA)
  • Industrial Injuries Benefit
  • Lump-Sum Bereavement Payments
  • Maternity Allowance
  • Pension Credit
  • Personal Independence Payment (PIP)
  • Severe Disablement Allowance
  • Universal Credit
  • War Widow’s Pension
  • Winter Fuel Payments and Christmas Bonus
Source:HM Revenue & Customs | 29-09-2025
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Aitch
I'm Aitch, the Founder and CEO of CIGMA Accounting Ltd. As a Chartered Management Accountant and as a CIMA member, I've spent more than 16 years helping businesses, entrepreneurs, landlords, and individuals with tax planning, accounting, and HMRC compliance. As a chartered accountant in London, I'm passionate about making complex tax matters easier to understand and helping clients make confident financial decisions. Over the years, I've advised start-ups, SMEs, established companies, and high-net-worth individuals across a wide range of tax and accounting matters. My expertise includes Corporation Tax, Self-Assessment, Capital Gains Tax, Inheritance Tax planning, R&D tax relief, capital allowances, international tax, and resolving complex HMRC compliance issues. Whether clients need a business accountant, tax accountant, or strategic tax advisor, my focus is always on delivering practical advice that creates long-term value. One of my specialist areas is Making Tax Digital (MTD). I've worked extensively with businesses preparing HMRC's digital reporting requirements, helping them move to cloud accounting, improve financial processes, and adopt technology that makes compliance more efficient. I regularly speak at Making Tax Digital roadshows, industry events, and educational sessions in collaboration with Zoho Books, sharing practical insights into digital accounting, tax legislation, and the future of the profession. Many business owners looking for the best accounting firm in London are not simply searching for an accountant they're looking for trusted advice, responsive support, and long-term value. That's the approach I've taken in building CIGMA Accounting. My team and I work closely with businesses across London and the UK, providing accounting services, tax advisory, bookkeeping, payroll, VAT, company accounts, and strategic tax planning tailored to each client's goals. Through this website, I share practical guidance on UK taxation, Making Tax Digital, HMRC updates, Corporation Tax, Self-Assessment, and business finance. My aim is to provide reliable, straightforward information that helps business owners understand changing regulations, reduce compliance risks, and make informed financial decisions with confidence.
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