Contractual sick pay, Tax Credits as legacy benefit, SSP, new style ESA

samk777

Hi
I am in receipt of disability working tax credits. My SSP will run out soon. I will continue to receive contractual sick pay for a further 6 months of around £150 per week. I live in a Universal Credit area and currently receive working tax credit as a legacy benefit. A Universal Credit calculation shows that I would currently receive nothing (because there is no allowance for severe disability which there is with tax credits) so I am much better off on WTC longer term or until I am forced to switch. I therefore really don't want to lose the tax credits. My contract of employment continues. A few questions -

1. When my SSP stops, will I still be classed as employed for tax credit purposes or will my TC claim stop?

2. If this is the case and my WTC claim stops for a couple of months, will I be able to restart WTC when I return to work or would it be gone for good as a legacy benefit?

3. If WTC stops when SSP stops, could I re-access the WTC legacy benefit if I claim new style ESA for a period?

4. Can I claim new style ESA in a UC area?

Thank you for any advice.

calcotti

When your SSP stops you will no longer be treated as working for tax Credits purposes. You must tell HMRC your situation. You will no longer be entitled to be paid WTC but your claim will remain live to be resumed when you return to work.

You can claim new style ESA - DWP staff may advise you to claim UC, do not do this as this will close your WTC claim.

Claiming new stye ESA will not prevent you resuming WTC payments later.

samk777

Many thanks Calcotti

calcotti

One point to add is that new style ESA is taxable income and will need to be declared to HMRC for inclusion in your tax credit award calculation.

Icequeen99

calcotti wrote: »

When your SSP stops you will no longer be treated as working for tax Credits purposes. You must tell HMRC your situation. You will no longer be entitled to be paid WTC but your claim will remain live to be resumed when you return to work.

You can claim new style ESA - DWP staff may advise you to claim UC, do not do this as this will close your WTC claim.

Claiming new stye ESA will not prevent you resuming WTC payments later.

I disagree with Calcotti on this one - to qualify for WTC you need to be in qualifying remunerative work. There are regulations that treat you as in qualifying remunerative work for periods of incapacity/sickness but once that period is over, your claim ends. There is no provision that allows a claim to remain open with no WTC payments.

Edited: HMRC's view has been challenged and Upper Tribunal confirmed it is 28 week period in total so you can't add SSP + ESA periods. http://administrativeappeals.decisions.tribunals.gov.uk//Aspx/view.aspx?id=4768

See https://www.gov.uk/hmrc-internal-manuals/tax-credits-technical-manual/tctm02421

calcotti

OP - I think Icequeen is right and I was wrong. My apologies.

In respect of Icequeen's last paragraph I think there was a case that confirmed that you cannot be treated as in work while on ESA if you have already had SSP but I can't recall the case. In essence you can be treated as still in work for a maximum of 28 weeks while getting SSP or ESA.

I think the most important thing is for you to keep HMRC informed to avoid overpayment of Tax Credits. You must do this within one month of the change.

Icequeen99

calcotti wrote: »

OP - I think Icequeen is right and I was wrong. My apologies.

In respect of Icequeen's last paragraph I think there was a case that confirmed that you cannot be treated as in work while on ESA if you have already had SSP but I can't recall the case. In essence you can be treated as still in work for a maximum of 28 weeks while getting SSP or ESA.

I think the most important thing is for you to keep HMRC informed to avoid overpayment of Tax Credits. You must do this within one month of the change.

I know there was a maternity to ESA case, I can't recollect the ESA one hence suggesting the challenge but will check to see if I can find it.

Yes - found it http://administrativeappeals.decisions.tribunals.gov.uk//Aspx/view.aspx?id=4768

IQ