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bigduckontax
bigduckontax, Accountant
Category: Tax
Satisfied Customers: 4423
Experience:  FCCA FCMA CGMA ACIS
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I am a married man of 40 years, I am 61 years old, I have not

Resolved Question:

I am a married man of 40 years, I am 61 years old, I have not worked since 1993 due to ill health. I receive a works pension, I have been on incapacity benefit up to last year - this has now been replaced by employment support allowance. Since being on ESA my tax code has altered drastically. Could you please tell me why? - I list below my incommings.

Pension (up to April 2013) = £11,744.44 Gross
Tax Deducted 727.00
Tax Code 810L

ESA £636 per month After tax

New tax code April 2014 - 430L

My wife is retired and receives a works pension and state pension of:-

Works Pension = £2,760 Net
DWP = £3,696 Net
Submitted: 3 years ago.
Category: Tax
Expert:  bigduckontax replied 3 years ago.
Hello, I'm Keith and happy to help you with your question. The news I bring you may find unpalatable.

Contributions based Employment Support Allowance (ESA) is taxable. Please see HMRC website EIM76101. This is the reason your tax coding has been reduced so that other payments under PAYE can collect the tax due on ESA to produce a tax zero position at the year end.

Should your ESA not be contribution based then you should take the matter up with your tax office to enable the code to be restored to a higher figure.

Your wife's is a separate person for tax purposes and in any event her income appears to be below the annual Personal Allowance and thus outside the scope of UK tax.

I do hope I have been able to throw some light on your question.
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Expert:  bigduckontax replied 3 years ago.
Thank you for your support. I am sorry for your predicament; you may have been stuffed by the system. Always remember Benjamin Franklin's dictum that in life there are but two certainties, death and taxes.