Advice requested please regarding ESA (CB)

In July 2013, I underwent the medical for ESA having been on IB. My reassessment put me into the support group, with a 3-year review period.

I have been claiming IB since it was called Invalidity Benefit and my claim has been continuous since well BEFORE 6. April. 2001.

I was led to believe by DWP that under the 'Transition Regulations' I was exempted from paying tax on my small occupational pension.

My ESA (CB) contains a £44 'top-up' payment on top of the £106 weekly amount to which I was entitled.

My problem now seems to be that I have already been re-coded TWICE by HMRC, the upshot of which is that I am now almost £200 a month WORSE OFF in my monthly income. My personal tax allowance has dropped from £9440 to £7145 and now I notice that I have received a tax code of BR which now means that everything I get is taxed at 20%.

DWP refuse to tell me what information they have passed to HMRC and they in turn say that they can only base tax codes on information they have received from DWP.

To say it's mess would be an understatement. I have referred to the paragraph below and the stated exemptions.

Can someone please help me understand this mess Thank you in anticipation....................TC

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Pension income rules
If you who make a new non-linking claim to Incapacity Benefit and have a gross pension income of more than £85 a week, the amount of benefit payable will be reduced by half of the excess.
The excess is the difference between £85 and the actual pension income. For example, for a pension income of £100, the excess is £15. The amount of Incapacity Benefit payable is reduced by half of that, which is £7.50.
Exceptions
This rule does not apply if:
• you were in receipt of Incapacity Benefit prior to 6 April 2001
• your claim is made under the linking rules for Incapacity Benefit and links back to before 6 April 2001
• you receive the highest rate of the care component of Disability Living Allowance

Thanks Gordon.

My IB claim was from before the 1995 date (actually 1990) you quote and as you say was not taxable. I retained the 'non-tax' status when the title of the benefit changed as I was an 'existing and continuing claimant'.

The figures are: £71.70 living expenses
£ 34.80 SG allowance
£ 44.14 'top-up' payment

The award letter from DWP says that : "No income will be taken off your ESA".

My only income is as per described. I have no savings and no other income from any source (other than described). That has been exactly the same since my original claim to the current date..

I was only alerted to the confusion when the different tax codes started arriving without any prompting from me and the HMRC were adamant that they were basing their codes on information supplied from DWP.

They asked me to send them copies of the letters I received from DWP confirming my ESA (CB) award (which I did) and in the meantime I asked DWP to tell me what information they gave to HMRC. They refused, though admit having advised HMRC of a change in my benefit entitlement.

How on earth I can be £200 worse off is a complete mystery. Naturally, my former employers are governed by the information supplied to them by HMRC, regardless of what I tell them.

Someone seems to have made a serious cock-up somewhere. I am utterly non-plussed.

I take on board the advice about 'advice from a trained advisor' but I have nothing else to tell.

I take on board the advice about the use of a 'professional advisor' - thanks.

If I may add, my claim for IB actually dates to 1991 - well before the date you mentioned - and the claim has been continuous throughout. I was then migrated to ESA (CB) in July this year.

The HMRC are adamant that they have based their tax codes on information provided by DWP who, in turn, have declined to tell me what information they have passed to HMRC, though they do admit to advising them (correctly) as to a change in my benefit circumstances.

The award letter from DWP gives me the details as follows:

Living expenses: £71.70
SG allowance £34.30
'Top-up' payment £44.14

The next line then says : "No income will be taken from your ESA allowance"

Which element of the amount I receive is taxable then ? Another point - the letter says that the amounts quoted here apply from August 1st 2013 to 27 November 2013. What happens after that, because my award was for 3 years ?

I have no savings of any sort and no other source of income save for those I have mentioned. A drop of £200 per month is unbelievable and will cause me some very serious problems.

Thank you. I agree with your maths as I had already written down the exact figures you quote.

My monthly occupational pension due to be banked tomorrow is almost £200 down on the usual monthly amount. That is the serious problem that has arisen.

I will ring HMRC - again - and see if they can throw any more light on the situation. Somehow, there seems to be an error somewhere.