NI Contribution only ESA and 5 hours per week work - Tax Issue

I'm currently on NI contribution only ESA. Due to being on maternity and then reduced hours during the tax years they take into account when working out if you have paid enough contributions, I had not, and therefore I receive no payments, just NI contributions. 

On 1st November I started working for my husbands company, doing 5 hours per week, from home, for £325 per month. On my December pay, I was taxed £30 odd. Absolutely perplexed by this as I earn no where near the threshold of my tax free amount per year. 

When I go on government gateway it has my tax free amount for DWP(ESA) first, as primary 'employment' so £9k allowance, then my actual employment as a second 'employment' with £1.9k allowance. 

Does anyone understand this? Does that mean I have to pay tax on the amount from my job, and the money set aside for ESA won't be taken into account because I don't get ESA payments? 

Any help would be greatly appreciated 

Comments

  • Dazed_and_C0nfused
    Dazed_and_C0nfused Posts: 12,776
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    chezmoy said:
    I'm currently on NI contribution only ESA. Due to being on maternity and then reduced hours during the tax years they take into account when working out if you have paid enough contributions, I had not, and therefore I receive no payments, just NI contributions. 

    On 1st November I started working for my husbands company, doing 5 hours per week, from home, for £325 per month. On my December pay, I was taxed £30 odd. Absolutely perplexed by this as I earn no where near the threshold of my tax free amount per year. 

    When I go on government gateway it has my tax free amount for DWP(ESA) first, as primary 'employment' so £9k allowance, then my actual employment as a second 'employment' with £1.9k allowance. 

    Does anyone understand this? Does that mean I have to pay tax on the amount from my job, and the money set aside for ESA won't be taken into account because I don't get ESA payments? 

    Any help would be greatly appreciated 
    PAYE is only ever provisional, any changes or incorrect assumptions can easily be rectified.

    How much do you think your P60 from DWP will show your (taxable) ESA to be for the tax year to 5 April 2024?

    How much do you expect your earnings from your new job will be for the tax year to 5 April 2024 i.e. the amount that will be on the P60 from your new job?
  • Spoonie_Turtle
    Spoonie_Turtle Posts: 8,173
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    chezmoy said:
    I'm currently on NI contribution only ESA. Due to being on maternity and then reduced hours during the tax years they take into account when working out if you have paid enough contributions, I had not, and therefore I receive no payments, just NI contributions. 

    On 1st November I started working for my husbands company, doing 5 hours per week, from home, for £325 per month. On my December pay, I was taxed £30 odd. Absolutely perplexed by this as I earn no where near the threshold of my tax free amount per year. 

    When I go on government gateway it has my tax free amount for DWP(ESA) first, as primary 'employment' so £9k allowance, then my actual employment as a second 'employment' with £1.9k allowance. 

    Does anyone understand this? Does that mean I have to pay tax on the amount from my job, and the money set aside for ESA won't be taken into account because I don't get ESA payments? 

    Any help would be greatly appreciated 
    PAYE is only ever provisional, any changes or incorrect assumptions can easily be rectified.

    How much do you think your P60 from DWP will show your (taxable) ESA to be for the tax year to 5 April 2024?

    How much do you expect your earnings from your new job will be for the tax year to 5 April 2024 i.e. the amount that will be on the P60 from your new job?
    Given that they say they recieve no payments, presumably that should be £0.
  • Dazed_and_C0nfused
    Dazed_and_C0nfused Posts: 12,776
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    chezmoy said:
    I'm currently on NI contribution only ESA. Due to being on maternity and then reduced hours during the tax years they take into account when working out if you have paid enough contributions, I had not, and therefore I receive no payments, just NI contributions. 

    On 1st November I started working for my husbands company, doing 5 hours per week, from home, for £325 per month. On my December pay, I was taxed £30 odd. Absolutely perplexed by this as I earn no where near the threshold of my tax free amount per year. 

    When I go on government gateway it has my tax free amount for DWP(ESA) first, as primary 'employment' so £9k allowance, then my actual employment as a second 'employment' with £1.9k allowance. 

    Does anyone understand this? Does that mean I have to pay tax on the amount from my job, and the money set aside for ESA won't be taken into account because I don't get ESA payments? 

    Any help would be greatly appreciated 
    PAYE is only ever provisional, any changes or incorrect assumptions can easily be rectified.

    How much do you think your P60 from DWP will show your (taxable) ESA to be for the tax year to 5 April 2024?

    How much do you expect your earnings from your new job will be for the tax year to 5 April 2024 i.e. the amount that will be on the P60 from your new job?
    Given that they say they recieve no payments, presumably that should be £0.
    Probably yes but a lot might have changed since the current tax year started last April.
  • chezmoy
    chezmoy Posts: 4
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    My earnings from DWP will be £0 

    My earnings from my job will be 5 months so £1,650 (before tax as they're taxing me as of December's wage) 
  • Dazed_and_C0nfused
    Dazed_and_C0nfused Posts: 12,776
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    chezmoy said:
    My earnings from DWP will be £0 

    My earnings from my job will be 5 months so £1,650 (before tax as they're taxing me as of December's wage) 
    In that case just update your Personal Tax Account with your expected income from each source and HMRC will automatically recalculate your tax codes.

    Given the (taxable) ESA is expected to be £0 it might be prudent to over estimate the job to say £2500.

    You should then get tax code 250T at the job and your employer will recalculate the tax due the first time they use the new code and refund any overpaid tax through your wages, so you might get £325 + £30 odd at the end of January and then £325 at the end of February and March.
  • chezmoy
    chezmoy Posts: 4
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    Thank you so much for your help. Is personal tax account seperate from the government gateway thing where you can view NI contributions and tax etc? I can't recall seeing an option to change my expected income 
  • molerat
    molerat Posts: 31,557
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    edited 3 January at 5:48PM
    chezmoy said:
    Thank you so much for your help. Is personal tax account seperate from the government gateway thing where you can view NI contributions and tax etc? I can't recall seeing an option to change my expected income 
    Same thing.  There should be an option for each income stream, "View or update details" or "Update or remove" depending on type of income.

  • chezmoy
    chezmoy Posts: 4
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    I've just tried to do it and it doesn't even show DWP as an option to change, just my employment which is already set to an estimated £1,950. 

    Do I just need to grin and bear it and will I automatically get a tax refund in April? 
  • sheramber
    sheramber Posts: 18,637
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    Phone HMRC. Best to phone when lines open . Try shortly before as some staff start work early and will answer phone.
  • Just to say from personal experience in 2022/3, I had to wait as DWP would not confirm my expected income. The refund was almost automatic, but took 14 weeks to materialise. I believe I had to log in and claim it when I wax notified. 
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