Were it not for Part 10 of ITEPA, the social security benefits would not be chargeable.
Indeed! The civil legislation I mentioned is not making a distinction about the nature of the earnings and I feel it should.
Part 10
is helpful:
Income Tax (Earnings and Pensions) Act 2003
http://www.legislation.gov.uk/ukpga/2003/1/section/403
403 Charge on payment or other benefit
(1) The amount of a payment or benefit to which this Chapter applies counts as employment income of the employee or former employee for the relevant tax year if and to the extent that it exceeds the £30,000 threshold.
So whilst its taxable the likelyhood is that it never would be for a basic rate tax payer. The £30,000 limit satisfies the requirement separating it out from employment income. Unfortunately the legislation says ITTOIA income is relevant. It cannot be attached to employment but earning could also be set to £30,000 before it qualifies as relevant. By doing this, benefit income could be isolated under both ITEPA and ITTOIA for basic rate tax payers.