PAYE78095 - PAYE operation: taxation of jobseeker’s allowance: two schemes in operation for JSA

In April 2004 the 2003 PAYE Regulations came into effect. These simplified the previous regulations and for social security benefits brought them in line with Department for Work and Pensions and HMRC procedures.

The introduction of Scottish tax from 6 April 2016 and Welsh tax from 6 April 2019 means individuals will pay tax at the England and Northern Ireland, Scottish or Welsh tax rate(s) depending on the individual’s residency status.

The Income Tax Residency Status screen on NPS will display ‘Scottish’, or ‘Welsh’ Taxpayer’ for the tax year where the individual is liable to pay tax at the Scottish or Welsh rate(s) and their tax code will have an S (Scottish) or C (Welsh) prefix.

Further information about Scottish tax is given at PAYE100035.

Further information about Welsh tax is given at PAYE100040.

Statutory Instrument (SI) 2003 No.2682 Regulations 148 - 172 gives details of two separate schemes in operation for Jobseeker’s allowance (JSA).

Normal Cases (Chapter 1)

This is the main scheme. The Department for Work and Pensions (DWP) operates a modified form of PAYE on taxable amounts of benefit paid to the wholly unemployed. Claims are made at local Benefit Offices.

Special Cases (Chapter 2)

This is a subsidiary scheme for Special Cases, sometimes called temporary stop claimants. The DWP tells HMRC and the individuals concerned of amounts of taxable benefit paid to

  • Employees who have been temporarily laid off work or placed on short time working. In some cases the employer may include the benefit in normal PAYE operations
  • A claimant who is a share fisherman

PAYE is not operated by the DWP on any of these payments.

Northern Ireland

In Northern Ireland both schemes are operated by the Department for Social Development in local Social Security Offices. In this guidance read

  • Department for Social Development for Department for Work and Pensions
    and
  • Social Security Offices for Benefits Offices