jsa tax?

meurgo

hi all, first post. i'm 21 and have been unfortunate enough to be on job seekers allowance leaving university. today i received a letter from the 'certificate of pay and taxable benefit and tax deducted/refunded' and it's causing me a fair bit of concern. the letter has a table which reads like this;

"benefit for current claim: £1568.48
taxable: £1568.48 - tax refunded: £0.00
pay and taxable benefit £1568.48 - net tax deducted: £0.00

now does this mean they are deducting £1568.48 from me or does it actually mean they are deducting nothing at all? i realise this may be a daft question, but if they were deducting nothing at all why would they bother writing to me in the first place? i wasn't even aware that jsa was taxable at all? any information and or advice would be very much appreciated as i'm more than a little worried here.
thanks for reading.

HappyMJ

Contributions based JSA is taxable. Income based JSA is not. As the amount payable is below your personal allowance then no tax is due. They write to you so you can include it in a tax return and when you come off JSA they give you a P45 to give to your next employer. No need to be worried.

meurgo

HappyMJ wrote: »

Contributions based JSA is taxable. Income based JSA is not. As the amount payable is below your personal allowance then no tax is due. They write to you so you can include it in a tax return and when you come off JSA they give you a P45 to give to your next employer. No need to be worried.

ok thanks. so i don't need to pay them anything? and i assume the £1568.48 is how much i have claimed in jsa and not what i owe them? still a little strange as to why they would bother writing at all though if they're not actually deducting anything?

princessdon

HappyMJ wrote: »

Contributions based JSA is taxable. Income based JSA is not. As the amount payable is below your personal allowance then no tax is due. They write to you so you can include it in a tax return and when you come off JSA they give you a P45 to give to your next employer. No need to be worried.

Oh great so when they give you £71 a week on c based jsa - they'll take 20/40 % tax off too?

Stephen_Leak

Only on anything over the current £8105 personal allowance.

I'm unemployed (or semi-retired, depending on whether you read the "Daily Wail" or not), but due to an occupational pension and my savings, I'm not due any JSA. However, I've actually received this form, with all £0.00s.

HappyMJ

princessdon wrote: »

Oh great so when they give you £71 a week on c based jsa - they'll take 20/40 % tax off too?

Well yes but every week you are not working you will get a refund for all the other weeks in which you overpaid tax....

For example - work 26 weeks from Apr-Oct and earn an annual salary of £16,000. The earnings would be £8,000 and tax would be due on £4,000 of that due the tax free allowance applying weekly. Then sign on and get £1,846 over 26 weeks at £71 a week and pay no further tax. You would get a refund. The annual earnings are £9,846 and the tax paid has so far been £790. However, the tax due on £9,846 is £348 so a refund cheque of £442 would be due from the HMRC.

Caz3121

princessdon wrote: »

Oh great so when they give you £71 a week on c based jsa - they'll take 20/40 % tax off too?

It is taxable income and, unlike PAYE, no tax is deducted at source so it will be added to the rest of the years taxable income.
If someone spends the year on JSA then they will pay no tax as the total will be less than their personal allowance
If someone earns £50k in 6 months and then is on JSA for the next 6 months, then yes they will be due 40% of the JSA to the taxman

princessdon

Oh joy! Thanks for that, I genuinely thought you got the £71. They don't tax other benefits so I naively assumed it was tax free, back to the budgeting spreadsheet I guess. Thanks though - glad I realised it now.

Ps do they tax income protection too?

HappyMJ

princessdon wrote: »

Oh joy! Thanks for that, I genuinely thought you got the £71. They don't tax other benefits so I naively assumed it was tax free, back to the budgeting spreadsheet I guess. Thanks though - glad I realised it now.

Ps do they tax income protection too?

Lots of benefits are taxable. The state pension is taxable income. The payments from your income protection may be taxable or they may be tax paid at source depending on how the policy was set up if using pre tax income or post tax income. You need to check the insurance policy. Most insurance policies paid from net income will pay out as tax paid and no further income tax is due. If your company paid the premiums from pre-tax income then the payments usually are taxable.

princessdon

It's a private scheme that I pay for nothing to do with the company so I assume it's tax free? No mention in policy at all. Thanks btw I do appreciate it, tis all new to me.

meurgo

so, i'm being deducted nothing then?