paying income tax on ESA

NYM

Do you have to complete Self Assessment?

Darksparkle

Can't decide that you for I'm afraid.

Criteria is here - http://www.hmrc.gov.uk/manuals/pommanual/PAYE95005.htm

dave030445

NYM wrote: »

Do you have to complete Self Assessment?

Hi no I didn't if I had it would be a lot easier as all would of been sorted

dave030445

I'm dreading 2015/16 as that will be the same bloody tax office

NYM

Did you get a Tax Coding Notice?

dave030445

NYM wrote: »

Did you get a Tax Coding Notice?

Sorry to be ingnorent what's a tax codeing notice

NYM

It's a notice from HMRC to notify you of your tax code for the year.

dave030445

NYM wrote: »

It's a notice from HMRC to notify you of your tax code for the year.

Yes got one of those

Lanzarote1938

dave030445 wrote: »

Yes got one of those

Your coding notice tells you what income they are basing your tax free allowance on. I get one every year and it always shows my State Pension as taxable income, although the tax due on it is deducted from my private pension as there is no mechanism in the DWP system to enable due tax to be deducted prior to payment.

fira

Dave

A similar thing happened to me and I couldn’t get my head around what/how tax was paid on it. Hope this helps a wee bit as I was new to claiming the benefit and it all seemed to go wrong tax-wise, then fixed.

I went on to ESA (C) Sept 2015 and the claim ended three months later. As I have a small pension, I received £419 ESA in those three months.

In early December 2015, around 2 weeks before the claim was due to end, I got a tax notice from HMRC saying my tax code had been reduced immediately from 1060L to 811L. They had deducted a whopping £2482 from my personal allowance for the ESA ‘paid’. I called them and actually got a helpful bloke who explained that they had been advised by DWP that ESA had been awarded to me, and the date it started. He said they had their own system of averaging/calculating out a forward projection to the end of the tax year, 5th April 2016, of what ESA I would be paid and then adjust my tax-free allowance and code by that amount.

I explained that I would not be going for another fit note, was going to close the claim and figured I’d only have been paid £419 ESA when that happened. He asked me to wait until DWP sent me my P45 after they’d shut my ESA down, give HMRC a ring again with the details on it and they would amend the code.

When the P45 arrived showing what I’d been paid, I did just that, the HMRC guy I spoke to this time did the adjustment as we spoke and my code has gone up to 1018L. I was sent a revised Tax Coding/Personal Allowance notice.

It was annoying that their calcs seemed to use the full rate of ESA, times the weeks between September 2015 to 5th April 2016. To be honest I still cannot work out how they reached the sum of £2482!!

Bill