Deductions

Employed clients will usually have income tax taken off of their wages and salary using a system called Pay As You Earn (PAYE).

In the UK, most people get a Personal Allowance which is an amount of money you can earn tax-free each year. This is currently £12,570 (2025/26). Check the Gov.UK website for current rates for Personal Allowance: www.gov.uk/income-tax-rates If a client earns less than this, they do not pay income tax. If a client earns more than this, they will only pay income tax on the amount above £12,570.

Deductions for income tax are usually evidenced by payslips.

If the client pays variable amounts of income tax, these amounts can be averaged based on the evidence provided.

If a client is only eligible for Carer Support Payment after deductions, they should have a planned earnings review following operational guidance.

Deduction for income tax is automatically calculated by the Self-Employment Calculator . Regulations set out that to calculate the client’s deduction for income tax:

• calculate the client’s ‘chargeable income’ which is gross receipts less allowable business expenses (or one-third of earnings for childminders)
• minus their personal tax reliefs such as Personal Allowance,

multiply the resulting figure by the Scottish basic rate. If the Personal Allowance is greater than or equal to the chargeable income, then no income tax is deducted.

If the Personal Allowance is less than the chargeable income, then the Personal Allowance is deducted in full if the assessment period is a year, or on a pro-rata basis if the period is less than a year.

If the assessment period is less than a year, the Personal Allowance is pro-rated.

The remaining figure should then be multiplied by the Scottish basic rate in Scotland (20%). More information on Scottish tax rates at gov.uk.

For more details see Carer Support Payment Regulations, Schedule 2, Paragraph 13

Employed clients will usually have their National Insurance Contributions taken off of their wages and salary using the Pay As You Earn (PAYE) system.

Clients only pay National Insurance Contributions if they earn above a certain threshold. How much they pay in contributions depends on how much they earn.

Deductions for National Insurance are usually evidenced by payslips. Where a client has paid National Insurance, the deduction evidence should be added t following operational guidance.

If the client pays variable amounts for National Insurance, these amounts can be averaged based on the evidence provided.

If a client is only eligible for Carer Support Payment after deductions, they should have a planned earnings review following guidance in About planned earnings reviews for Carer Support Payment | Social Security Scotland.

Self-employed earners usually pay two types of National Insurance:

• Class 2 Contributions, which are a flat weekly amount deducted if the client’s income is above the lower profits threshold
• Class 4 Contributions, which are a percentage of profits above a certain threshold deducted on income between lower and upper profit limits.

The most up to date rates can be found on gov.uk. 

National Insurance Contributions for self-employed clients are automatically calculated by the Self-Employment Calculator.

For Class 2 Contributions, the calculator will work out:

• the chargeable income (gross receipts less allowable business expenses);
• the number of weeks that there is a liability;
• the weekly rate multiplied by the number of weeks that there is a liability

For Class 4 Contributions, the calculator will work out:

• the chargeable income (gross receipts less allowable business expenses);
• the number of weeks in the assessment period;
• the lower earnings limit from chargeable income up to the upper earnings limit (or the pro rata amount if the assessment period is less than a year);
• the remaining figure multiplied by the percentage rate to give the notional contribution figure.

A self-employed person may not be liable for Class 4 contributions if they are a ‘sleeping partner’. This is where they are a business partner who supplies capital and takes a share of the profits but takes no active part in the running of the business.

For more details see Carer Support Payment Regulations, Schedule 2, paragraph 13(2)

Employed clients pay into a workplace pension through either:

Contributions from net salary or after tax	This is where clients contribute to a workplace pension after tax and National Insurance has been deducted from their pay.
Salary sacrifice	This is where the employer pays the pension contribution on the client’s behalf before tax and National Insurance is deducted from their pay.

 

Deductions for workplace pension contributions are usually evidenced by payslips.

The client advisor can check whether the client paid into a pension from net salary or through salary sacrifice by checking payslip evidence against HMRC earnings data.

Where clients have paid into a pension through salary sacrifice, 100% of this pension contribution will have already been deducted from Taxable Pay by the client’s employer.  

Client advisors must always ensure that only 50% of any pension contributions are deducted from earnings in the system.

Employed clients may also contribute to a private pension scheme. Separate statements would be required to evidence private pension contributions as these would not be shown in payslips.

If the client pays variable amounts into their pension, these amounts can be averaged based on the evidence provided.

If a client is only eligible for Carer Support Payment after deductions, they should have a planned earnings review following guidance in About planned earnings reviews for Carer Support Payment | Social Security Scotland.

Self-employed clients may pay into a private pension. These deductions can be evidenced with statements for the private pension.

If the client pays variable amounts into their pension, these amounts can be averaged based on the evidence provided.

If a client is only eligible for Carer Support Payment after deductions, they should have a planned earnings review following guidance in About planned earnings reviews for Carer Support Payment | Social Security Scotland.

Costs for fuel or travel for commuting to a client’s place of work and their home should not be counted as a deduction.

Travel costs can be deducted where:

• A client has to visit a different location to the location they are contracted to work from usually
• A client has to visit one of their work’s customers in order to do their job

Travelling costs can include the cost of public transport, taxi fares or fuel costs for driving a car.

For miles travelled using their own car for work, the client should confirm if either:

• the travel was for commuting to the client’s home and their normal place of work
• the travel was for going between different places of work

They should also advise an estimate of the total fuel spent on work-related travel.

Please note these illustrative examples have been worked out using the 2025-26 earnings threshold. For a list of current and previous threshold amounts please see operational guidance on benefit rates.

Example of deduction for travel costs

Reshma applies for Carer Support Payment for looking after her father. She also works as a part-time sales representative and usually earns £200 a week before deductions. Reshma uses her own car for sales visits to clients in different locations. The fuel costs are not paid for by her employer. 

Reshma indicates on her application that she has paid work-related expenses. A client advisor contacts her to confirm what her expenses are. She provides details of her work travel and says she usually spends £150 a month on fuel for work.  

The client advisor adds the expense as a Deductions Evidence following operational guidance.

We calculate the weekly deduction as:  
(£150 x 12) / 52 = £34.62  a week  

Reshma does not have any other deductions. Her net weekly earnings are calculated as: 

£200 - £34.62 = £165.38 a week. 

If a client has an expense for something that is used for both their work and personal reasons, we should only count the work-related part of the cost as a deduction.

Example of utilities from working from home

Donna is a project manager and sometimes works from home. When she works from home, her employer does not pay her back for any utilities she uses such as gas, electricity and internet broadband.  

When Donna applies for Carer Support Payment, a client advisor requests evidence of what Donna usually spends on energy and internet broadband. Donna:

• uploads copies of her recent utility bills
• estimates that she works 7 hours a week from home

To calculate the work-related expense:

• the advisor averages the utility costs across the bills provided
• then calculates the proportion of time Donna works:
  • 7 hours out of 168 hours in a week = 4%

4% of the utility bill and be deducted from Donna’s gross earnings.

We can deduct an expense from a client’s gross earnings if it was directly related to and necessary for the client’s job.

This will depend on both:

• The nature of the client’s work
• The purpose of the expense

For example, if the client works at a hair salon, expenses for safety footwear used in construction sites would not be directly related to the client’s job as a hairdresser or necessary for them to do their job.

Example of deduction for work equipment

Sarah is a Nursery Play Assistant and applies for Carer Support Payment. She regularly earns £200 a week. Sarah indicated on her application that she has paid for work-related expenses.

A client advisor contacts her to gather more information about her expenses. Sarah often buys stationary and play materials for the children at her work and does not get paid back for this. She provides receipts for the expenses.   

	Deductions for work-related expenses
Week 1	£5.50
Week 2	£6.50
Week 3	£7.00
Week 4	£5.00

The client advisor averages the expenses:

5.50 + 6.50 + 7 + 5 = 19.5

19.5 / 4 = 4.87

£4.87 per week on average for work-related expenses

We calculate Sarah’s net weekly earnings as:

£200 – £4.87 = £195.13

Work-related expenses may be evidenced by:

• Receipts
• Invoices
• Transport tickets
• Bank statements clearly showing the amount for the expense

When supporting information is received, the decision maker should be reasonably satisfied that it is more likely than not (on the balance of probabilities) that:

• the work-related expense was paid for by the client
• the work-related expense was directly related to and necessary for the client’s work

If the client pays variable amounts, these amounts can be averaged based on the evidence provided.

If a client is only eligible for Carer Support Payment after deductions, they should have a planned earnings review in line with operational  guidance.