Unpaid tax - caused ESA claim closure

I’ve recently started permitted work and only work 15.5 hours a week. My weekly pay should be under the £152, but due to a system issue with HMRC - apparently it’s very common! - my previous employer’s details hadn’t been carried across. I have been on long term sick but made redundant last November, so I’m definitely a tax payer for this tax year, 2022/23.

Due to the system issue my permitted work employer hasn’t taxed me and caused me to go over the permitted pay of £152 a week, I currently get paid £170.50 a week. DWP have closed my claim and are not willing to listen to why I have been paid more than the allowed amount.

HMRC have confirmed I will get an unpaid tax letter and that I will be taxed on the weekly £170.50

When I started looking at work I worked out that I would definitely be under the £152 a week based on my hourly rate and hours.

I can’t be the only one that has been affected by this. According to the decision maker she’s never heard of an issue like this before. It’s like “computer says no!” situation.

I have evidence from my government gateway account and HMRC are sending me a letter to confirm the situation. They can’t say when I will receive my underpaid tax letter. This would be useful as it will breakdown how much tax I owe.

My question is has anyone been through something similar and made a successful mandatory reconsideration or been to tribunal and won?

Does anyone have any advice on how to make sure my mandatory reconsideration form gets my point across.

Hi JPAF-hud,

I might be reading your message wrong so forgive me, But I am reading that you are currently on £170.50 pw . if that is the case then you are above the earnings threshold of permitted work, £152. I believe that it is the gross figure they take and not after tax etc. So basically it is minimum wage rate that they base it on, anything over that then you would have to reduce your hours to keep under the threshold of £152.
Sorry if I have got the wrong end of the stick.

Good luck

I might be stupid here, but surely even at £170.50 you fall under the tax threshold anyway. Isn't it £12,570 so your £170.50 would work out to £8.866 and as such wouldn't be taxable.... therefore you would not have any deductions and would definitely be over the £152 threshold!

The contribution based ESA counts as taxable income as well.