ESA Permitted Earnings

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DMG Chapter 49, Earnings of employed earners

Paragraph 49027

49027 Net earnings are gross earnings less*
1. income tax and
2. Class 1 NI contributions and
3. half of any sum paid by the employee, towards an occupational or personal pension scheme.

*ESA Regs, reg 96(3)



Income tax
49028 Deduct from gross earnings any income tax deducted by the employer.

NI contributions
49029 NI contributions are often called SS Contributions or NI Conts. Reduce gross earnings by any Class 1 contribution deducted by the employer.

Occupational pension scheme deductions or personal pension scheme payments
49030 Deduct from the employee’s gross earnings for a normal pay period one half of any amount which
1. a person pays into an occupational pension scheme for that period or
2. is deducted by the employer from a payment of earnings as a contribution to an occupational pension scheme for that period or
3. a person contributes towards a personal pension scheme for that period.

Example: Patricia earns £50 a week and is paid weekly. She pays £26 a month into a personal pension scheme. Her normal pay period is a week. Her pension contribution is changed into a weekly figure (£26 x 12 ÷ 52 = £6 pw) and half of this weekly figure (£6 ÷ 2 = £3) is deducted from her gross weekly earnings (£50 - £3 = £47).


Vol 9 Amendment 8 July 2011
49031 Occupational pension schemes1 are arrangements by which an employer provides benefits for employees based on service. The benefits may be provided by the employer or through a pension provider. Benefits are
1. normally in the form of a pension, all or part of which may be taken as a lump sum
2. payable on death or retirement.

1 ESA Regs, reg 2(1); PS Act 93, s 1 49032 - 49033 49034

Personal pension schemes1 are
1. a scheme under certain pension and taxation legislation2 or
2. an annuity contract or trust scheme under certain taxation legislation
3. They provide benefits independently of any employer (although an employer may still make contributions to such a scheme). Benefits are payable as annuities which may provide lump sum and pension payments payable on death or retirement.

1 ESA Regs, reg 2(1); 2 PS Act 93, s 1; Income and Corporation Taxes Act 1988,
Chapter 4 of Part 14 & Finance Act 2004, Sch 36, para 1(1)(g); 3 Income and Corporations Taxes Act 1988,
s 620 or s 621; Finance Act 2004, Sch 36, para 1(1)(f) & Income & Corporation Taxes Act 1988, s 622(3)

49035 Where a person pays contributions into both an occupational and a personal pension scheme, the deduction from gross earnings should be one half of the total payments made for the pay period1.

TELLIT01

Confuseddot wrote: »

That wasn't what she was told when she phoned for the permitted work form and on the form itself it talks about work you have already started.

We were told to advise the claimant to check before starting Permitted Work, and I do accept that the form refers to work already started. The proposed work may not be allowed if it could worsen an existing condition and extend the period of claim. I accept that the probability of this happening is low.
Not all staff know how to hand the situation. A friend of mine actually phoned to request a PW1 and stressed that he was only thinking about Permitted Work. When his next payment didn't arrive he phoned and was told it was because he hadn't returned the PW1 form!
You really can't win at times!

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It should not be suspended, even if the claimant says they have started the work, as long as they declare the work is less than the permitted limits. If they are lying they will have to pay back the overpayment.

TELLIT01

epitome wrote: »

It should not be suspended, even if the claimant says they have started the work, as long as they declare the work is less than the permitted limits. If they are lying they will have to pay back the overpayment.

I totally agree that it shouldn't have been suspended, but it was. It also took quite a battle to get it reinstated. Most staff are pretty decent but there are certainly some 'jobsworths' around, normally staff who think they know far more than they actually do! They generally start conversations with other staff with "But the rules say..." despite that fact that nobody else in the office interprets what is written in the same way as them!

Gpod

Sambella wrote: »

But if they find they CAN manage 16 hrs they would then be entitled to probably the more generous tax credits, no?

That depends upon her status. A single person over 25 would have to work at least 30 hours to qualify for working tax credits, an under 25 would not qualify.

If she receives DLA/PIP, those qualifying hours would reduce to 16 (she would also qualify for WTC if she is under 25 and receiving DLA/PIP).

Qualifying hours also vary depending on having a partner or children.

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TELLIT01 wrote: »

I totally agree that it shouldn't have been suspended, but it was. It also took quite a battle to get it reinstated. Most staff are pretty decent but there are certainly some 'jobsworths' around, normally staff who think they know far more than they actually do! They generally start conversations with other staff with "But the rules say..." despite that fact that nobody else in the office interprets what is written in the same way as them!

It would more commonly be a combination of lack of understanding, lack of confidence, fear of reprisals against them if they lifted the suspension wrongly. Of course in this scenario, where they have an uncertainty, they should ask the BC to call the customer back... but then they are afraid of their "handover target" being missed and fear of managment for doing too many handovers.... This is one of the latest things of DWP management to impose ridiculous targets for handover percentages. The upshot of which is increasing error & reducing quality.

Or it could have been someone, as you say, who wrongly agrees with the suspension and thinks they are right to leave the suspension on the claim.

Always remember, if you insist on a call-back from the BC your request cannot be refused.

TELLIT01

epitome wrote: »

but then they are afraid of their "handover target" being missed and fear of managment for doing too many handovers.... This is one of the latest things of DWP management to impose ridiculous targets for handover percentages. The upshot of which is increasing error & reducing quality.

The ridiculous targets aren't confined to the call centres, but you are right about them being scared to hand calls on. Targets within processing centres and JSA offices are virtually impossible to achieve if you want to do the job properly. Those in their ivory towers spout the mantra of "Once and done" and then promptly follow that by telling staff they have to increase productivity by 20%. When I left the only measure of productivity in our processing office was the number of claims cleared. Accuracy was not a factor. I was actually told on more than one occasion that errors weren't our problem as they had to be sorted out by another team, and to "just get the claims processed".
Income Support and ESA new claims processors now have less than 30 minutes to process a claim. That covers everything from checking the other benefits a customer may be claiming, doing the same for the partner, their NI contribution history (for Conts claims), phoning and /or writing out for additional information. Then going through any additional information when it arrives, and inputting to the system, and finally adding the same notes to umpteen different systems because none of them talk to each other. Is it any wonder there are so many errors?
In theory we were supposed to look at the Guidance systems for every aspect of every claim just in case qualifying conditions had changed since we processed the previous claim 30 minutes earlier. You can imagine how often that actually happened.