The Income Tax (Exemption of Scottish Adult Disability Living Allowance) Regulations 2025
The Income Tax (Exemption of Scottish Adult Disability Living Allowance) Regulations 2025, effective March 19, 2025, amend the Income Tax (Earnings and Pensions) Act 2003 to fully exempt Scottish Adult Disability Living Allowance from income tax.
This amendment is made under the authority of the Finance Act 2020 and clarifies the tax treatment of this specific benefit.
Arguments For
Intended Benefit: Provides tax relief to recipients of Scottish Adult Disability Living Allowance, aligning tax treatment with similar benefits in other parts of the UK.
Legal/Historical Basis: The regulations are made under the powers conferred by section 13(1) of the Finance Act 2020, demonstrating a legal basis for the change in tax policy.
Implementation Method: A straightforward amendment to the Income Tax (Earnings and Pensions) Act 2003 through the insertion of a new entry in Table B, section 677(1), which details which social security benefits are tax-exempt.
Arguments Against
Potential Impacts: May slightly reduce government revenue, though the financial impact is likely to be small relative to overall tax revenue.
Implementation Challenges: Minimal practical implementation challenges, as the amendment is specific and straightforward.
Unintended Effects: No significant unintended effects are immediately apparent, though a broader impact assessment may be warranted depending on future policy shifts or changes in benefit uptake.
- Citation and commencement These Regulations may be cited as the Income Tax (Exemption of Scottish Adult Disability Living Allowance) Regulations 2025 and come into force on 19th March 2025.
This section establishes the official title of the regulations as the "Income Tax (Exemption of Scottish Adult Disability Living Allowance) Regulations 2025" and sets their effective date as March 19, 2025.
- Amendment to the Income Tax (Earnings and Pensions) Act 2003 In section 677(1) of ITEPA 20032 (UK social security benefits wholly exempt from tax: Table B), in Part 1 of Table B (benefits payable under primary legislation and Northern Ireland welfare supplementary payments etc), at the appropriate place insert—
| Scottish Adult Disability Living Allowance3 | SS(S)A 20184 | Sections 24 and 31 |
This section details the specific amendment made to the Income Tax (Earnings and Pensions) Act 2003 (ITEPA 2003).
It instructs the insertion of a new row into Table B of section 677(1), which lists UK social security benefits exempt from income tax.
The new row adds Scottish Adult Disability Living Allowance to this list, referencing its legal basis in the Social Security (Scotland) Act 2018.
Explanatory Note (This note is not part of the Regulations) These Regulations make an amendment to Chapter 5 of Part 10 of the Income Tax (Earnings and Pensions) Act 2003 (c. 1) (“ITEPA 2003”), so as to provide that no liability to income tax arises on social security benefits of a description specified in the Regulations. Regulation 2 amends section 677 of ITEPA 2003 by inserting a new row into Part 1 of Table B, in order to wholly exempt Scottish Adult Disability Living Allowance from income tax. A Tax Information and Impact Note has not been prepared for this instrument as it contains no substantive changes to tax policy.
The explanatory note summarizes the regulations' purpose without being legally binding.
It clarifies that the regulations remove income tax liability for specific social security benefits, detailing the amendment to section 677(1) of ITEPA 2003 which achieves this exemption for the Scottish Adult Disability Living Allowance.
The note also confirms that no separate tax impact assessment was deemed necessary due to the non-substantial nature of the policy changes.
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