tax code split between company pension and contribution based ESA support group

beanielou

hi. first post, so please be kind, not sure where to post this, hope this is OK
i have been in receipt of a company pension since 2014, did not hit the £85 disregard rate until a few years ago, my weekly pension is £94.90 or £411.25 pcm, giving me an annual income of £4935, by my calculation, and my tax code is 598L i am also in receipt of contribution based ESA support group payments of £124.55 a week after half of my pension over £85 a week is taken off. my ESA tax code is BR i worked out my esa IS 6476.6  a year, so the 2 added together comes to £11.411.6, well below the tax threshold, is this the way it should be or do i need 2 tax codes? any advice very much appreciated, thanks

I have copied this from the disabilty money saving board for @feefree.

Can anyone help.  Thanks 

p00hsticks

beanielou said:

my ESA tax code is BR 

I'm not sure where they get this from but it doesn't sound right to me ?

Contributions based ESA is indeed a taxable benefit, but as far as I'm aware DWP never deduct tax and so they wouldn't be given a tax code by HMRC.

 As I understand it DWP would let HMRC know the amount of ESA they expect to pay in the year,and HMRC will then adjust the tax code they in turn pass to the pension company so that the right amount of tax is deducted.

 So the tax code the pension company has is calculated by HMRC taking the annual ESA amount supplied by DWP , which the OP says is 6476, from the standard tax allowance, which is usually 12570. I make that 6094, giving a tax code of 609L, which is not far off the 598L that the OP says the pension company has been given (the difference can possibly be explained if the ESA figure quoted is for 52 weeks rather than 365.25 days).

 So the pension company can pay £6094 / £5980 before they need to start deducting tax - and as the pension is less than this, then no tax will be deducted (assuming that the pension payments are made regularly throughout the year.

Dazed_and_C0nfused

beanielou said:

hi. first post, so please be kind, not sure where to post this, hope this is OK
i have been in receipt of a company pension since 2014, did not hit the £85 disregard rate until a few years ago, my weekly pension is £94.90 or £411.25 pcm, giving me an annual income of £4935, by my calculation, and my tax code is 598L i am also in receipt of contribution based ESA support group payments of £124.55 a week after half of my pension over £85 a week is taken off. my ESA tax code is BR i worked out my esa IS 6476.6  a year, so the 2 added together comes to £11.411.6, well below the tax threshold, is this the way it should be or do i need 2 tax codes? any advice very much appreciated, thanks

I have copied this from the disabilty money saving board for @feefree.

Can anyone help.  Thanks 

DWP don't deduct tax from ESA so the tax code is of little or no importance for that source of income.

Presumably the 598L code included a deduction which factors in the fact that you receive ESA and as 598(9) is greater than your pension of £4935 no tax will be deducted from it.

Dazed_and_C0nfused

This was near the end of the first post on this thread 😀

I have copied this from the disabilty money saving board for @feefree.

eskbanker

Dazed_and_C0nfused said:

This was near the end of the first post on this thread 😀

I have copied this from the disabilty money saving board for @feefree.

That poster already started an identical thread on this board a couple of days ago:

https://forums.moneysavingexpert.com/discussion/6496351/tax-code-split-between-company-pension-and-esa-contribution-based-support-group-payment

beanielou

eskbanker said:

Dazed_and_C0nfused said:

This was near the end of the first post on this thread 😀

I have copied this from the disabilty money saving board for @feefree.

That poster already started an identical thread on this board a couple of days ago:

https://forums.moneysavingexpert.com/discussion/6496351/tax-code-split-between-company-pension-and-esa-contribution-based-support-group-payment

My apologies. 

I did not see it.