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Other income - how to work it out for your tax credits claim

When the Tax Credit Office works out your tax credits payments, they look at your income for the last tax year. A tax year runs from 6 April one year to 5 April the next. As well as what you earn by working you'll have to give details of other income. If you're claiming as a couple it is your joint other income that counts.

On this page:

What you should include as other income

You should include the following types of other income - but only if the total was more than £300:

  • income from your savings before tax is taken off
  • investments, such as company dividends
  • pensions
  • income from property
  • income from trusts, settlements and estates
  • foreign income
  • notional income, for example, where income is available to you but you have not taken it

For example, if your total other income from any of these added together was £421, only include £121 (£421 less £300).

There are exceptions to this rule though. For the following types of other income you should include the full amount - don't deduct £300:

  • the Adult Dependant's Grant paid to you if you are a student
  • miscellaneous income that is taxable

For help working out your other income, use the worksheet in the notes that came with your tax credits claim form or renewal pack, or call the Helpline on Tel 0845 300 3900 or Textphone 0845 300 3909.

Download notes on making a tax credits claim (PDF 2.6MB)

Income from savings and investments

You need to include interest from your bank or building society accounts. You can find this information on interest statements or your passbook.

Also enter income from UK company dividends, including dividends from a company of which you and/or your partner are directors. If you received UK company dividends, you should add the tax credit - shown on the dividend voucher supplied by the company - to the dividend.

You should also include any chargeable event gains from a life insurance policy, for example from the sale of an investment bond. The amount of the gain will be shown on the certificate issued by your insurer.

Pensions

You will need to enter the amount of any State Pension, including:

  • basic or old-age pension
  • social security pension lump sums
  • State Earnings Related Pensions (SERPS)
  • Graduated Pension (Graduated Retirement Benefit)
  • Industrial Death Benefit
  • Widow's Pension
  • Widowed Mother's Allowance
  • Widowed Parent's Allowance

You should also include:

  • any increase for a dependent child
  • any incapacity addition or addition for a dependent adult
  • any increases paid to uprate a guaranteed minimum pension

If you receive an occupational or personal pension, you will need to give the full amount before any tax was taken off. You can find this information on your P60 or other certificates of pension paid. Also include any annuity payments from a pension scheme.

If your pension includes an extra amount for a work-related illness or injury, call the Helpline on Tel 0845 300 3900 or Textphone 0845 300 3909 for help on what to enter.

Property income

Include income from property in the UK that you own or rent.
Don't include:

  • income that's covered by the Rent a Room scheme
  • property income that you've included as part of your self-employed income

If your rental property made a loss, you can use a working sheet to help you work out what to enter.

Download a working sheet to calculate relief and losses (PDF 250K)

Income from trusts, settlements and estates

If you have received income from a trust, settlement or the estate of someone who has died, the trustees or administrators will have given you a certificate telling you what income was paid to you - form R185 (Trust) or form R185 (Estate). Include the gross amount - the amount before any tax was taken off.

Foreign income

This may, for example, be income from investments and property overseas or social security payments from overseas governments. You should include the full amount, whether or not it came into the UK. You should include the gross amount - the amount before any tax was taken off - even if it is not taxable in the UK. Give the amount in British pounds, not the foreign currency.

If you receive a foreign pension, whether or not it came into the UK, you should include 90 per cent of the full amount in British pounds, not the foreign currency.
You may take off any banking charge or commission paid when converting foreign currency into British pounds. If you need any help, you can contact the Helpline on Tel 0845 300 3900 or Textphone 0845 300 3909.

Notional income

Notional income is income that you're treated as having which you may not in fact have. Include:

  • Trust income that under Income Tax rules is treated as the income of another person. For example, investment income of a minor child where trust funds have been provided by you and the amount exceeds £100.
  • Income that you did not take so you could get tax credits or more tax credits.
  • Income that you were entitled to but did not apply for. For example, a social security benefit or allowances paid to local government councillors or civic dignitaries.

This does not apply to:

  • a deferred State Pension, although when it is paid, a social security pension lump sum or an enhanced state pension will count as pension income for tax credit purposes
  • a trust arising from a payment as a result of a personal injury
  • a personal pension scheme or retirement annuity contract
  • compensation for personal injury which is administered by the Court
  • Income you lost out on because you worked for less than the going rate, or for nothing, if the person you are working for, or providing a service to, has the means to pay. This does not apply to voluntary work for example, helping out in a charity shop or Citizens Advice Bureau or employment or training programmes

Also include capital that's treated as income, for example if you hold shares in a UK company and they give you new shares - called a stock dividend - instead of a cash dividend.

For help working out notional income, you can contact the Helpline on Tel 0845 300 3900 or Textphone 0845 300 3909.

Adult Dependant's Grant

Include all money you received for the Adult Dependant's Grant - regardless of whether the amount is over or under £300. The Adult Dependant's Grant is paid to students with a partner or a dependent adult.

Miscellaneous income

Enter any miscellaneous income which is taxable - for example, copyright royalties paid to you for a book when you are not a professional author. If you are unsure whether to include the income, call the Tax Credit Helpline on Tel 0845 300 3900 or textphone 0845 300 3909.

Include all miscellaneous income – regardless of whether the amount is over or under £300.

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What not to include

Don't include:

  • maintenance payments received from a former partner
  • tax credit payments
  • student loans
  • student grants, except the Adult Dependant's Grant
  • income your children have had, unless it's taxable in your or your partner's name
  • the Christmas Bonus and the Winter Fuel Payment
  • income from tax-free savings such as Individual Savings Accounts (ISAs), Personal Equity Plans (PEPs), index-linked and fixed-interest National Savings Certificates, Children's Bonus Bonds war pensions
  • pensions or annuities paid to victims of Nazi persecution

If you are unsure whether or not to include income, call the Tax Credit Helpline on Tel 0845 300 3900 or Textphone 0845 300 3909.

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Working out your total other income

To get the final figure:

  • add up your other income, including your partner's if you're part of a couple
  • take away £300 from this figure

Remember that you should include all of the money you received from the Adult Dependant's Grant and miscellaneous income – regardless of whether the amount is over or under £300.

Write the final figure on your claim form or Annual Declaration Form, rounding it down to the nearest pound. If you end up with a minus figure, enter 0.

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Contact the Tax Credit Office

If you need more help you can call the Tax Credit Helpline which is open from 8.00 am to 8.00 pm, every day except Christmas Day, Boxing Day, and New Year's Day. The numbers you can ring are:

  • Tel 0845 300 3900
  • Textphone 0845 300 3909 – if you are deaf or have a hearing or speech impairment

If you're calling from overseas you can also contact the Tax Credit Office on Tel + 44 289 053 8192.

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More useful links

Income from employment - work it out for your tax credits claim

Income from self-employment - work it out for your tax credits claim

Changes in income and tax credits

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