How your income affects your benefit entitlement

Earned Income

Normally we will ask for 5 consecutive weekly, or 2 monthly wage slips from each job you and your partner (if any) have. From these we will calculate your average weekly or monthly wage. The amount we use for working out your benefit is your Net Earned Income, this is calculated by deducting all Income Tax and National Insurance you pay from your gross income, we also deduct half of any private pension or Superannuation contributions. N.B. Earned income also includes Sick Pay and Maternity Pay.

Not all of your Net Earned Income is used when working out your benefit. Certain items are ignored, for example:

  • The first £5 of a single person's net earned income.
  • The first £10 of a couple's net earned income.
  • The first £25 of a lone parent's net earned income.
  • The first £20 of a person with a disability's net earned income.

Unearned income

The table below lists the most common types of unearned income. We will normally use the full amount of this income to work out your benefit, however in some cases we can disregard some or all of this income. 

Common types of unearned income

Type of Income How much is used in working out your benefit
Attendance Allowance  None
Child Benefit  None
Fostering Allowance  None 
Incapacity Benefit (Lower)  All 
Incapacity Benefit (Middle)  All
Incapacity Benefit (Higher)  All (but £20 is disregarded from any earned income)
Income Support  None
Industrial Disablement or Injuries Benefit  All
Industrial Death Benefit  All 
Carers Allowance £20 disregarded if your carer is working 
Jobseeker-s Allowance (Contribution Based)  All
Jobseeker-s Allowance (Income Based)  None
Child Maintenance Received  None
Maternity Allowance  All 
New Deal Grant  None
Private Pension or Employer Pension Scheme  All, but any tax paid is disregarded 
Retirement Pension  All
Severe Disablement Allowance  All (but £20 disregarded from any earned income) 
War Disablement Pension  None 
War Widows Pension  None 
Widows Pension  All 
Working Tax Credit (WTC)  £17.10 disregarded if working over 30 hours per week 
Works Pension/Superannuation  All, but any tax paid is disregarded 

Some of these Unearned Incomes are also awarded extra "Premiums" which can increase your benefit.

Last reviewed: 07 - 02 - 2014

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