SME Accounting Specialists

Taxable & tax-free state benefits

Source: HM Revenue & Customs | | 20/11/2025

While there are many state benefits available, it is not always clear which of these are taxable and which are tax-free.

HMRC’s guidance outlines the following list of the most common state benefits which are taxable, subject to the usual limits:

  • Bereavement Allowance (previously Widow’s Pension)
  • Carer’s Allowance or (in Scotland only) Carer Support Payment
  • Contribution-Based Employment and Support Allowance (ESA)
  • Incapacity Benefit (from the 29th week you receive it)
  • Jobseeker’s Allowance (JSA)
  • Pensions Paid by the Industrial Death Benefit Scheme
  • The State Pension
  • Widowed Parent’s Allowance

The most common state benefits that usually tax-free include the following:

  • Attendance Allowance
  • Bereavement Support Payment
  • Child Benefit (income-based – use the Child Benefit tax calculator to see if you’ll have to pay tax)
  • Disability Living Allowance (DLA)
  • Free TV Licence for Over-75s
  • Guardian’s Allowance
  • Housing Benefit
  • Income Support – though you may have to pay tax on Income Support if you’re involved in a strike
  • Income-Related Employment and Support Allowance (ESA)
  • Industrial Injuries Benefit
  • Lump-Sum Bereavement Payments
  • Maternity Allowance
  • Pension Credit
  • Personal Independence Payment (PIP)
  • Severe Disablement Allowance
  • Universal Credit
  • War Widow’s Pension
  • Winter Fuel Payments and Christmas Bonus
 

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