paying income tax on ESA

dave030445

I know that you pay income tax on CB ESA, but how does the tax get deducted. Do ESA stop it at source like any other paye income. How does the tax people know you are on ESA?

Darksparkle

Do you have any other taxable income that would take you over the personal allowance?

DWP inform HMRC of any taxable benefits.

dave030445

yes i do.
so at what point will the DWP inform the tax people at the start of the tax year or at the end of the tax year. so the tax people should adjust my tax code to take into account my ESA payment is that correct?

nannytone_2

i suspect it would be done via a change in tax code, and that they would pay the usual amount of ESA and the tax would be paid via your other income

dave030445

nannytone wrote: »

i suspect it would be done via a change in tax code, and that they would pay the usual amount of ESA and the tax would be paid via your other income

Hi thanks your reply Thats what i would of thought. But ive just got a letter in the post saying that ive not been paying tax on my ESA and i owe them over £2000 which they are going to claim back over 2016/17 which works out that i don't have any tax free allowance at all for 2016/17 so will be taxed on 100% of my income. This doesn't seem fair when tax credit people were aware of my ESA all the same company i thought.

Darksparkle

Tax credits aren't responsible for your tax in any way, even if dealt with by HMRC.

dave030445

Darksparkle wrote: »

Tax credits aren't responsible for your tax in any way, even if dealt with by HMRC.

No that's right but HMRC did know about my ESA

Darksparkle

dave030445 wrote: »

No that's right but HMRC did know about my ESA

But when did the tax office know?

dave030445

Darksparkle wrote: »

But when did the tax office know?

Thats the 64 million dollar question. they are saying they didn't know

Darksparkle

dave030445 wrote: »

Thats the 64 million dollar question. they are saying they didn't know

As far as I am aware, DWP pass the figures on at the end of the tax year. However regardless of whether they told them on time or not, if the figures are correct then you do owe the tax and it would need to be paid.

If it's going to cause you hardship for your pension to be taxed at the appropriate rate then call them and see if it can be repaid some other way.

dave030445

yes they said pay it in one lump sum. DWP said its all sent via computers to computers so the tax office did know about it but failed to act on the info give (ESC A19)