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TaxVince
TaxVince, Accountant
Category: UK Tax
Satisfied Customers: 961
Experience:  Chartered Accountant >20 years + Qualified IFA
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I am in receipt of a SIP and a War Disability Pension both

Resolved Question:

I am in receipt of a SIP and a War Disability Pension both of which I have been advised are exempt from tax. My question is should either of these be declared as income when applying for Child Tax Credits. I believe that the War Pension is classed as non-declarable but not sure about the SIP.
Submitted: 9 months ago.
Category: UK Tax
Expert:  bigduckontax replied 9 months ago.
Hello, I'm Keith and happy to help you with your question.

War Disability Pensions are frequently exempt from tax and Norcross at Blackpool, the administering authority in such matters, will so advise you if you are in doubt.

SIP is confusing me however. SIP is a communications protocol, perhaps you could enlighten me. Do you mean a SIPP?
Customer: replied 9 months ago.
Relist: Answer quality.
The reply I received provided no additional information that I wasn't already aware of
Customer: replied 9 months ago.
SIP stands for Service Invaliding Pension. I already know that both my War Pension and SIP ARE TAX EXEMPT. My question was should they be declared as income for Child Tax Credit claim.
Expert:  bigduckontax replied 9 months ago.
Your income must exceed GBP 50,000 per annum to have an effect on reducing Child Tax`Credit claim. If this is not the case by all means declare it, but make a note on the claim form to that effect.
Customer: replied 9 months ago.
That makes no sense to me whatsoever. I have paid £22 to get a definitive answer to my question. I just wanted to find out if a tax exempt War Disablement Pension and Service Invaliding Pension are regraded as income which does not need to be declared when claiming for Child Tax Credits.
Expert:  bigduckontax replied 9 months ago.
HMRC guidance states that:

'Income includes money from state benefits unless they’re ‘tax free’ benefits. Tax-free benefits include:

Child Benefit
Housing Benefit
Attendance Allowance
Disability Living Allowance
Personal Independence Payment'

Thus you would appear`not to have to declare your disability and invaliding pensions on the claim form. However, if you had done so, but annotated as I suggested you would still have made a valid claim. In any event your income would have to exceed GBP 50,000 pa to begin to suffer restrictions.
Customer: replied 9 months ago.
Relist: Other.
I would like another expert to reply to my original question
Expert:  bigduckontax replied 9 months ago.
As you request I will opt out of your question. However, I feel I have given you a correct reply in this matter.
Expert:  TaxVince replied 9 months ago.
Hi. Thanks for your question.

Should you find the answer below incomplete or you are not fully answered, please drop a reply before rating.

Just to add to the previous advisor, YES both service invaliding pension and a war disability pension are tax free and hence do not need to be declared on the claim form.

Regards
Customer: replied 9 months ago.
Judging by your reply can I take it that any income classes as exempt from tax is not considered as income that requires submission for Child Tax Credit. I am not being pedantic but for a fee of £22 pound I would like to get a more informed reply.
Expert:  bigduckontax replied 9 months ago.
This question has now reverted back to me in Vince's absence. You have now received 2 experts' opinions with the same conclusion.

Your tax exempt income does not have to be declared on the Child Tax Credit application form.

I feel this completely answers your question.
Expert:  TaxVince replied 9 months ago.
I have added direct reference from HMRC website that excludes all the incomes from Child tax credit claims - see List of Pensions and other payments EXCLUDED for tax credit purposes HERE. If not satisfied please let me know.
TaxVince, Accountant
Category: UK Tax
Satisfied Customers: 961
Experience: Chartered Accountant >20 years + Qualified IFA
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