Got letter saying tax is underpaid.

celinepatricia

My husband was finished from work due to ill health. his official leaving date was end July 2010. His sick pay had already run out and he was claiming ESA. His company paid him 11 weeks pay before he finished. We have recived a letter a letter today stating

PAYE Incom 10705 tax paid 1357.80
ESA 5025 tax paid 0.00

TOTAL 15730 1357.80

Flat rate job expenses
less 140

Income after deductions
15590

Personal allowance
6475

Income tax chargeable on
9115 = 1823.00
paid 1357.80
tax due 465.20

What I need to know is
he paid his tax on his earnings, if tax was due to be paid on esa why has it not already been deducted? He is now classed terminally sick and is not able to work so how is he supposed to pay this tax?
This is just another worry for us to deal with on top of everything else!! Thnaks for any help with this.

McKneff

Cant help with the tax thing, but may I suggest that he claims DLA, it can be fast tracked for a terminal illness.

Im sorry to hear you have both got this bombshell hanging over you.

McKneff

re the ESA, as far as I can think, over the year you are allowed to earn say £120 per week before paying any tax,
On the weeks that he got his ESA he would not have exceeded this £120 allowance per wek so didnt pay tax. but the amount he did get would be added to the total amount of income during the year so hence the shortfall. Thats the best way I can think to explain it.

Hopefully if you dont understand some one will be along to explain it better.

celinepatricia

Hi.. I can see what you mean but what I dont understand is why the esa didnt have tax taken from it before it was paid. the money he was paid by his employer has already had tax deducted.

McKneff

Probably because his ESA was say £85 per week but he would be allowed to earn £120 a week before any income would be taxed (if he got say £130 ESA he would have been taxed on the £10 iyswim. (£130 paid, tax free £120 so tax on the differnece)

It can only be calculated at year end because of this.

celinepatricia

Thanks McKneff, we will give them a call tomorrow. Will let you know how we get on.