Tax

Agusya

I dont understand this explanation at all . Can someone help? why I have to pay £84 extra this year? I phoned HM Revenue & Customs and a guy I spoke to had no idea… it looks like tax from work has been paid normal as always , then esa is being mentioned (thats for one month -April) £19 for something. This form doesn’t explain it very well. Do I need to do tax return for ESA benefit myself? Thanks!!

DullGreyGuy

It says your ESA payment was £411.89 which was paid without any tax paid on it so the bulk of the extra tax is the 20% income tax due on the ESA.

HappyHarry

It appears that you received £411.89 in ESA in the tax year 2023/2024. This is taxable income but no tax was deducted. As you were a basic  rate taxpayer you are now due tax at 20% on this income - which when added to a tiny shortfall in the tax collected by PAYE gives you the £84.20 that you owe. 

Bookworm105

in your case ESA appears to be the contributions based payment and so is taxable, but no tax is deducted from it at time of payment. Hence it is swept up into your annual calculation

although untaxed interest, the £19 is covered in full by the 0% rate applicable to savings interest, so you can ignore it in this context 

as your NHS income is more than your personal; allowance, then obviously the full 411.89 ESA is subject to 20% tax

however, looking at the tax deducted from your NHS pay it appears that at some point in the year your tax code may have changed and the amount of tax collected on payslips was a tad less than it should have been, so: 

411.89 x 20% = 82.38 + 1.82 underpaid tax on NHS = 84.20 tax still owed.

Dazed_and_C0nfused

Bookworm105 said:

in your case ESA appears to be the contributions based payment and so is taxable, but no tax is deducted from it at time of payment. Hence it is swept up into your annual calculation

although untaxed interest, the £19 is covered in full by the 0% rate applicable to savings interest, so you can ignore it in this context 

as your NHS income is more than your personal; allowance, then obviously the full 411.89 ESA is subject to 20% tax

however, looking at the tax deducted from your NHS pay it appears that at some point in the year your tax code may have changed and the amount of tax collected on payslips was a tad less than it should have been, so: 

411.89 x 20% = 82.38 + 1.82 underpaid tax on NHS = 84.20 tax still owed.

The £1.82 is standard for most people.

The Personal Allowance is £12,570 but the way PAYE works means tax code 1257L will allow tax code allowances of £12,579.

So when HMRC calculate your tax liability the starting point is often that you owe £1.80.  This is ignored for most people but is collected if a calculation needs to be issued for some reason.

Bookworm105

Dazed_and_C0nfused said:

Bookworm105 said:

in your case ESA appears to be the contributions based payment and so is taxable, but no tax is deducted from it at time of payment. Hence it is swept up into your annual calculation

although untaxed interest, the £19 is covered in full by the 0% rate applicable to savings interest, so you can ignore it in this context 

as your NHS income is more than your personal; allowance, then obviously the full 411.89 ESA is subject to 20% tax

however, looking at the tax deducted from your NHS pay it appears that at some point in the year your tax code may have changed and the amount of tax collected on payslips was a tad less than it should have been, so: 

411.89 x 20% = 82.38 + 1.82 underpaid tax on NHS = 84.20 tax still owed.

The Personal Allowance is £12,570 but the way PAYE works means tax code 1257L will allow tax code allowances of £12,579.

thank you for the reminder. Long time since i regularly manually calculated and had forgotten that it is technically 9 at the end. Think i used to use 5 at one time.

chrisbur

PAYE (ie the way your employer deducts tax ) is not quite the same as the way HMRC calculate your tax at the year end. 
PAYE uses figures from a booklet designed for use by anyone manually calculating tax due, of which there are very few these days but the figures are still used.  The table A figure for monthly paid employees is £12579.12 for the year.
HMRC have used your exact tax allowance for the year which is £12570.
This means you have not paid tax on £9.12
As advised there is also £411.89 with no tax deducted which when added to the £9.12 increased your taxable pay by £421.01
Both HMRC and PAYE ignore any pence on the year end taxable figures.  As you can see from the calculation there was 47 pence ignored by HMRC so the extra penny took that to 48 pence which would still be ignored.
This left £421 with 20% tax owing so £84.20  still to be paid.

For anyone interested each table A figure covers ten possible tax allowances (1257 covers allowances from £12570 to £12579 so everyone gets the top of the band for PAYE.  This then has to be adjusted slightly to be divisible by 12 with no fractions of a penny and to fit the way the tables only go up to 500.
For most people this difference in calculating tax is ignored by HMRC and only shows for anyone who gets an HMRC calculation.

Nomunnofun1

Bookworm105 said:

Dazed_and_C0nfused said:

Bookworm105 said:

in your case ESA appears to be the contributions based payment and so is taxable, but no tax is deducted from it at time of payment. Hence it is swept up into your annual calculation

although untaxed interest, the £19 is covered in full by the 0% rate applicable to savings interest, so you can ignore it in this context 

as your NHS income is more than your personal; allowance, then obviously the full 411.89 ESA is subject to 20% tax

however, looking at the tax deducted from your NHS pay it appears that at some point in the year your tax code may have changed and the amount of tax collected on payslips was a tad less than it should have been, so: 

411.89 x 20% = 82.38 + 1.82 underpaid tax on NHS = 84.20 tax still owed.

The Personal Allowance is £12,570 but the way PAYE works means tax code 1257L will allow tax code allowances of £12,579.

thank you for the reminder. Long time since i regularly manually calculated and had forgotten that it is technically 9 at the end. Think i used to use 5 at one time.

Very good - until 2013/14. 

It ended in 5 for a reason - to maximise the ‘error’ at £4 worth of allowances the tax on which would, once upon a time, have been material. Or so we were told!

Agusya

DullGreyGuy said:

It says your ESA payment was £411.89 which was paid without any tax paid on it so the bulk of the extra tax is the 20% income tax due on the ESA.

the question is - why tax wasnt paid on this? Whos responsible for benefit (ESA) tax payment? Is this not done automatically be those issuing benefits? Should I be doing it ?thanks 

Agusya

HappyHarry said:

It appears that you received £411.89 in ESA in the tax year 2023/2024. This is taxable income but no tax was deducted. As you were a basic  rate taxpayer you are now due tax at 20% on this income - which when added to a tiny shortfall in the tax collected by PAYE gives you the £84.20 that you owe. 

the question is - why tax wasnt paid on this? Whos responsible for benefit (ESA) tax payment? Is this not done automatically be those issuing benefits? Should I be doing it ? [I have been receiving ESA since April and I dont work anymore, Im not sure if I have to deal with tax myself now. Possibly in next tax year I will be getting money back?] thanks 

TheSpectator

Agusya said:

HappyHarry said:

It appears that you received £411.89 in ESA in the tax year 2023/2024. This is taxable income but no tax was deducted. As you were a basic  rate taxpayer you are now due tax at 20% on this income - which when added to a tiny shortfall in the tax collected by PAYE gives you the £84.20 that you owe. 

the question is - why tax wasnt paid on this? Whos responsible for benefit (ESA) tax payment? Is this not done automatically be those issuing benefits? Should I be doing it ? [I have been receiving ESA since April and I dont work anymore, Im not sure if I have to deal with tax myself now. Possibly in next tax year I will be getting money back?] thanks 

No it's not those paying ESA's responsibilty in the same way tax is not deducted from state pension. If your sole incone is now ESA you are unlikely to be liable to tax going forward.