ESA's "Permitted Work" & Taxes

Incogneato

Hello lovely Money Savers,

I have a question about earning "beer money", such as those tips and things here in Boosting Your Income threads. As I understand it, if I earn money in some way I have declare it to the DWP, no matter how much, even £5 click buttons in an app, or blogging, etc. I think that's correct.

Ahyhoo, I haven't had to go through any tax process before, my question is there tax implications of this? Do I have to record my Permitted Work pocket change, from a Paypal account, or what have you, then declare it on a tax form?

I am somewhat paranoid about stumbling into some tripwire, here. So excuse me if I've said something stupid.

Bananas123

hello,

i think you only have to tell them if you go above thresholds, so anything less can go in pocket

(BUT obviously ...if you go above thresholds and don't tell them, then you can be prosecuted etc)

(because there is time AS well as income to be considered re: "capability of work" (> can't be working "full time hours" and claiming benefit for being "unable to work" etc...):

Your ESA isn't usually affected if you either: earn up to £20 a week. work for less than 16 hours a week and earn up to £115.50 a week, for 52 weeks or less (or for any length of time if you're in the support group) This is called 'permitted work

/\ the key word being "usually" (i.e. if clarification needed > need to ring them i think)

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so basically as far as i know (not much) > you can drink away up to £20 p/w small earnings

(THATS ALOT OF FROSTY JACK)

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but if you are getting more income you are not allowed to earn more then £115.pw working no more then 16 hours.

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so if work is profitable / long term > best to ring them and make sure everything is above board.

(if i was earning more then £20 p/w > and thought it was a regular income, i would ring them anyway, just to not cause problems)

that's the way i understand it, although have not engaged in permitted work (on esa) (maybe wrong)

regards!

Darksparkle

If self employed you should register for self assessment. You complete this with details of all taxable income and this will determine if any tax or NIC to pay.

If you do any work for an employer, it's up to them to report it to HMRC.

nannytone_2

you also have to inform DWP BEFORE you commence any permitted work... not just if you go over the earnings/hours threshold

tomtom256

Any work has to be declared and the DWP will decide if it falls under permitted work.

Saves you hassle later on should you get reported etc for fraud.

Bananas123

sorry, i did not know about sending them intent of working.... seems a bit of a joke.

"dear dwp, i have intent to become an astronaut"

"no"

well then what about a lion keeper ?

"no"

*scratches head* i will contact you again tomorrow....

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seriously though ? > so you need to tell them you are going to be raising LESS then £20 per week, on ebay (etc) ? DESPITE not actually knowing if you are going to earn anything ?.

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(vs) setting up ebay hoping for the best > thereafter declaring all income (if at-all incoming) ? is "illegal" (whilst on esa ?)

is that correct ?

thanks / sorry.

Darksparkle

Bananas123 wrote: »

sorry, i did not know about sending them intent of working.... seems a bit of a joke.

"dear dwp, i have intent to become an astronaut"

"no"

well then what about a lion keeper ?

"no"

*scratches head* i will contact you again tomorrow....

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seriously though ? > so you need to tell them you are going to be raising LESS then £20 per week, on ebay (etc) ? DESPITE not actually knowing if you are going to earn anything ?.

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(vs) setting up ebay hoping for the best > thereafter declaring all income (if at-all incoming) ? is "illegal" (whilst on esa ?)

is that correct ?

thanks / sorry.

Its not just about the income. You are claiming an out of work benefit on the basis that you are unable to work due to illness/disability so need agreement that it is within permitted work.

tomtom256

Bananas123 wrote: »

sorry, i did not know about sending them intent of working.... seems a bit of a joke.

"dear dwp, i have intent to become an astronaut"

"no"

well then what about a lion keeper ?

"no"

*scratches head* i will contact you again tomorrow....

---

seriously though ? > so you need to tell them you are going to be raising LESS then £20 per week, on ebay (etc) ? DESPITE not actually knowing if you are going to earn anything ?.

---

(vs) setting up ebay hoping for the best > thereafter declaring all income (if at-all incoming) ? is "illegal" (whilst on esa ?)

is that correct ?

thanks / sorry.

Here is an idea, go and read the rules before trying to make fun of the system.

People claim ESA as they are too ill to work, then want to work via the permitted work system to help them ease back into it if they are able or to see if they are able..

Suddenly they become a X, Y, Z that doesn't fit with the illness they claim for, but hey I am earning less that £20 what does it matter and why should I report it!

6 months down the line they receive a brown envelope inviting them to attend an interview under caution as they failed to declare the work that didn't fit in with their illness and that their health has improved owing to this work.

densol_2

If you are on income based ESA its not taxable. If you are permitted to do the permitted work, then you can only earn £115.50 per week, which is £6006 per year thus way under ones usual personal allowance.

If you are on contribution based ESA of £109.30 pw that would be taxable £5683 per year plus taxable earnings of £6006 per year= £11689 so some of your money would be over the personal allowance and be subject to tax

Incogneato

I understand it's a difficult subject, so I appreciate it can stir people. Thanks for being civil.

As someone with mobility issues, the possible long-term plans of trying to "up-skill" myself from home by learning web design, or some suite of digital skills, then potentially pitching for small and cheap jobs on freelance sites seems somewhat untenable, really. At least without my health, a secure job, and self-employment paperwork in order first. Hm.

But I'm sure I'm not the only one who feels a deep vulnerability in it all.

I can admit there is that sense that it's not only about being honest but also, for me, a deep fear that if I take a step in the wrong direction at the wrong time, even if my intentions are good, that the safety net suddenly turns into razor wire.

Hows that for some later-afternoon self-pity! Whew.

Anyway, thank you for the responses, folks. Onwards.

Darksparkle

densol wrote: »

If you are on income based ESA its not taxable. If you are permitted to do the permitted work, then you can only earn £115.50 per week, which is £6006 per year thus way under ones usual personal allowance.

If you are on contribution based ESA of £109.30 pw that would be taxable £5683 per year plus taxable earnings of £6006 per year= £11689 so some of your money would be over the personal allowance and be subject to tax

Self assessment also takes into account NIC. On £6006, a self employed person would need to pay Class 2 NIC.