New Enterprise Allowance - taxable or not?

A new client has been receiving New Enterprise Allowance. Please can someone tell me (with authority for the answer) whether it is taxable or not. Depending on who I ask and where I look, the answer is different. Gov.uk says that 'any money you get does not affect income tax' implying that it is tax-free.  However, BIM40401 says that it is business income - how then can it not affect income tax? Which is correct please?
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  • It is business income, which is why it's covered by BIM40401, which says:

    "The payments are made under Section 2 of the Employment and Training Act 1973.

    Tax treatment

    New Enterprise Allowance weekly payments made to self-employed participants are exempt from income tax. They should therefore be excluded as income for the purposes of calculating the trading profits chargeable to tax.

    National Insurance treatment

    The New Enterprise Allowance weekly payments made to self-employed participants are disregarded for the purposes of Class 4 NICs.

    The individual is liable for Class 2 NICs, but in calculating their profits they may disregard New Enterprise Allowance weekly payments."

    I can see from NIM21028 and Regulation 45(2)(b)(iii) of the Social Security (Contributions) Regulations 2001 why there's no NIC, but I can't see a tax exemption anywhere.  ITTOIA s781 exempts payments under the New Deal 50Plus scheme, which was created under the same ETA 1973 section as NEA, but I can't find anything specific to NEA.

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