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To calculate the income of the customer or, in the case of a joint claim, the joint income of the customers for tax credit purposes, carry out the following steps.

Step 1

Calculate and add together the income of the customer and partner from the following sources

• pension income
• investment income
• property income
• foreign income
• notional income.

For more guidance about these sources of income, use TCM0120000.

Note: If the calculated result of this step is £300 or less, the income is treated as nil. If the calculated result is more than £300, only the excess is taken into account.

For example: Mrs S has annual income from shares (dividends) of £127. This is below £300. »Ê¹ÚÌåÓýapp income is treated as nil. In a different household, Mr P has annual income from property of £700, an annual pension of £800 and annual income from shares of £230. »Ê¹ÚÌåÓýapp total income is £1,730. Disregard £300. £1,430 is taken into account as income.

Step 2

Calculate and add together the customer’s income and partner’s income from the following sources

• student income
• miscellaneous income
• employment income. For more guidance about employment income, use TCM0118080
• Social Security income.

For more guidance about the latter source of income, use TCM0120000.

Step 3

Add together the amounts resulting from the calculations in steps 1 and 2.

Step 4

Calculate the trading income (if any) from the customer’s or partner’s work as a self-employed earner.

For more guidance about self-employment, use TCM0118180.

»Ê¹ÚÌåÓýapp earnings from self employment should then be added to the sum of the income at step 3.

Note: If the earnings from self-employment carried out on a commercial basis during the year have resulted in a net loss, the amount of that loss should be deducted from the total income at step 3. Follow the guidance in TCM0118180.

For example: Mr S’s annual income from employment is £14,300, he has income from investment income of £370, he also has self-employed work which has resulted in a net loss of £1,380 for the year. His income for tax credits purposes is calculated £14,300 plus £70 (£370 minus £300) equalling £14,370, minus £1,380 equals £12,990.

Step 5

»Ê¹ÚÌåÓýapp income of the customer and partner is the amount left after adding together income from all sources and deducting the appropriate amounts.

Note: »Ê¹ÚÌåÓýapp above income should be calculated in accordance with the key general rules and after applying the general disregards. For more information, use TCM0116100 and TCM0116080.

»Ê¹ÚÌåÓýappre is an Action Guide for this subject, select TCM0116040 to access it