ESA contributions based - taxable income question.

B_G_B

I submitted a claim for ESA, contribution based, in August 2013, and have received assessment rate since then. Last week I received notice that I have been placed in Support group and received an arrears payment from December (end of 13 week assessment period) up to present date.

I have just received a letter from jobcentreplus with a revised taxable income figure for tax year 2013-2014 and a part of this figure includes an amount of the arrears payment. Obviously a large part of the arrears was for that tax year. My question is though, should that money be included as part of last years taxable earnings, even though it was only received this year?

As far as I am aware, all other earnings (PAYE), interest on savings, have always counted against the tax year on the date that they have been received rather than the day that they were “earned”.

P.S. This question is asked out of curiosity only, as ESA is my only taxable income (except a nominal amount from savings interest) for both last tax year and this present one, so no effect will be felt as I am well below tax allowance threshold for both years.

nannytone_2

monsy is taxed in the year you actually receive it and not the year it was given ( if different)

xylophone

http://www.hmrc.gov.uk/manuals/eimanual/eim76005.htm

Does this help?

B_G_B

Thank you xylophone. That document certainly supports and clarifies the letter that I received. I just found it strange (albeit probably better for some) that the tax rules around benefits appear different to other types of income.

Horseunderwater

Assuming you had a P60u in May then this lump sum will be added into this tax years P60u which you should get in May 2015. The bit that is taxable is the figure under the bit that says contributions ESA. Did your letter say the end date of the award? If not then ring them up in due course to ask.

B_G_B

Horseunderwater wrote: »

Assuming you had a P60u in May then this lump sum will be added into this tax years P60u which you should get in May 2015. The bit that is taxable is the figure under the bit that says contributions ESA. Did your letter say the end date of the award? If not then ring them up in due course to ask.

P60u received in May for tax year 2013-2014. This shows ESA received which amounted to £2300 (approx 32 weeks x £71.70).

The award letter says that I have been put into support group and arrears have been paid of £950, which I received in my bank account a few days ago. No end date given for support group award.

The latest letter states (Quote).....
Because of changes in the allowance paid to you, the revised figures for taxation purposes are period ending tax year 2013/14…
Total allowance paid - £3000
Taxable allowance - £3000

Looks like £700 of the arrears has been added to 2013/14 tax year.
I assume that the remaining £250 of arrears forms part of 2014/15 tax year. This would tie in with xylophones post (3).

Please note that all figures have been rounded.

Horseunderwater

Ah - so what DWP is saying is that your CB ESA is circa £3k now for Tx YR end 14, so if you had any other income which when added to this figure takes you over £9445 then you may be due a refund for tax paid depending on how much is actually due or if under that amount & you'd paid tax then refund also due. Form P50 can be downloaded from hmrc website under forms then printed off.

B_G_B

Horseunderwater wrote: »

Ah - so what DWP is saying is that your CB ESA is circa £3k now for Tx YR end 14, so if you had any other income which when added to this figure takes you over £9445 then you may be due a refund for tax paid depending on how much is actually due or if under that amount & you'd paid tax then refund also due. Form P50 can be downloaded from hmrc website under forms then printed off.

I think that because another £700 has now been added to 13/14 tax year, if I had had enough additional income to take me over the £9440 threshold, this £700 would now be taxed in that year, even though it was received in 14/15 tax year. As I say, my income was well below this so it has no effect. Thank you for the P50 info all the same Horseunderwater.