Transitional Protection tax exemp

Just read that document and it states Claimants who are eligible for ESA will, on conversion, be taxed in the same way as existing claimants on ESA so on my understanding i will be taxed when im transfered from I.B. to E.S.A.

Gareth
Can you clarify some of the info

If the reason is because your extra income e.g. Occupational pension, is below £85 per week or you're on High Rate DLA Care or your IB claim began prior to April 2001 then the answer is no, you will continue to pay no tax on your [Contribution Based] ESA.

I receive an Occ Pen less than £85 per week, have been receiving High rate DLA Care for a number of years, and my IB claim dates to 1995.

Are you saying that I shouldn't be taxed? I haven't been in previous years, but this year I received a note from HMRC which intimated that my IB would be taxed although this hasn't happened automatically as yet. (I am aware that there were a significant amount of incorrect tax notices sent out this year).

I've also been having a look through the document you provided a link for.

From what you've said above, yes.

From:
www.ssac.org.uk/pdf/employment_and_support_allowance_regs.pdf

8.1 Currently customers who claimed IB or SDA before April 2001 or are entitled to the highest care component of Disability Living Allowance do not have their benefit reduced if they have occupational pension or private income. In contrast ESA customers have half of any occupational or private pension over £85 per week deducted from their benefit. For example a person with a pension of £100 a week, would have their ESA reduced by £7.50 a week. Anyone who currently benefits from the existing provision that disregards any occupational or private pension in their award of IB or SDA will continue to have this ignored when they transfer to ESA.

My reading of the above para is that it relates to potential reduction of benefit, but that it has nothing to do with tax. I know that DLA itself has been exempt from inclusion for tax purposes, but have not been aware of OccPens being tax-exempt. I think I've read elsewhere that if someone had been on the precursor to IB prior to mid-April 1995 that they would possibly be tax-exempt after the 'migration'. Asking for clarification again because there is a big difference between being exempt from tax and the assessment of income (ie. OccPens)that may affect benefit entitlement.

OK sorry I seem to have got a tad confused.

Normally if your combined IB and any other income is less than your personal tax allowance, currently £6475, then you won't pay any tax, however if it is over £6475 then you will pay some tax. Personal circumstances may apply which may alter your personal tax allowance, however it's always best to seek advice from HMRC.

With respect to ESA, CB ESA is a taxable benefit but IB ESA is not.

Direct Gov


With respect to having your IB/ESA reduced because of for example receiving an occupational pension then what has been said above applies.


I apologise for any confusion.