Re ESA & DLA

i have been on ESA (incapacity benefit before being changed to ESA some 6 yrs ago) My incapacity benefit was non taxable for the 14 yrs I was on incapacity benefit. I was told that my benefit amount would not change when i was changed to ESA. The amount paid to me did stay the same but i was taxed on my ESA from the start of being paid ESA. The result was I was worse off by about £150 each month due to being taxed. I always felt cheated because for 14 years i did not have to pay tax and then because the benefit changed its name from incapacity to ESA I was in effect having my benefit reduced despite being assured the amount paid would not change Has anyone had this happen to them or has anyone ever been successful in not having to pay tax

Hi and Welcome to the forum, you might want to have a look at the following FAQ which explain where everything is

Welcome to Benefits and Work

Yes, Contributory ESA is taxable. Although there are transitional arrangements that were supposed to ensure that claimants moving from IB to ESA are no worse off, there is no tax exemption as there was with IB.

My IB was tax exempt; will it still be under ESA?

Yes this happened to me as well and basically there is nothing you can do about it. I got my MP involved but was told that in effect I was still receiving the same amount. It was just the tax that was different. I am about £90 a month worse off. Another problem I found, which has continued over the past three years is that the HMRC have gotten my tax coding wrong every year as the DWP gave them the wrong amounts. It has meant that I have owed them money, so further increasing my tax payable and reducing my income. If this happens you must fight it, explain what has happened. I have just managed to get them to write off what I owed. It took numerous letters but don't give up. The other thing to watch is, if like me, because I was already receiving an amount higher than current ESA and they can't reduce it, I don't receive any increases in my ESA. The HMRC assumed, wrongly that I received an annual increase so although the figures were incorrect they were also wrong because they increased the amount they thought I was receiving. I hope that makes sense. You need to check your tax coding and the amounts they use otherwise it will become even worse than it is now.

Not being especially computer savvy I've just read your reply to my query sent 2 months 3 weeks ago on my I/b to esa transfer Thank you for invaluable information. So it was down to the coalition!
John