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Not all UK state benefits are tax-free. Being aware of which benefits are taxable can help you manage your finances effectively and avoid unexpected tax liabilities.

✅ Taxable State Benefits

According to HMRC, the following benefits are subject to Income Tax:

• State Pension

• Carer’s Allowance

• Jobseeker’s Allowance (JSA)

• Contribution-based Employment and Support Allowance (ESA)

• Incapacity Benefit (after the 28th week)

• Bereavement Allowance (formerly Widow’s Pension)

• Widowed Parent’s Allowance

• Pensions from the Industrial Death Benefit scheme 

Reference: HMRC – Tax-free and taxable state benefits

❌ Non-Taxable State Benefits

The following benefits are generally exempt from Income Tax:

• Universal Credit

• Personal Independence Payment (PIP)

• Disability Living Allowance (DLA)

• Maternity Allowance

• Attendance Allowance

• Bereavement Support Payment

• Housing Benefit

• Pension Credit

• Winter Fuel Payments & Christmas Bonus

• Child Benefit (Note: may be subject to the High Income Child Benefit Charge if your income exceeds £60,000)  

Reference: HMRC – Tax-free and taxable state benefits

Understanding the tax implications of these benefits ensures compliance with HMRC regulations and aids in accurate financial planning.

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