By: A.C.
I have to report to our readership a general heads–up regarding a situation that has arisen where I now owe the HMRC – the Taxman- to the tune of several hundreds of pounds through no fault of my own, but because I was shifted from Incapacity benefit onto ESA.
This is not such a strange situation as one would think. I was a civil/public servant, who retired on ill health, quite a number of years ago, when I was retired on a small occupational pension. I was awarded a small award because of the Industrial Disease that I had contracted which had then caused my incapacity to work. At that time I paid no tax on the benefit.
As the readers of this blog will know, the DWP started to move people from Incapacity Benefit to Employment Support Allowance (ESA) over the last three years. They also put income tax on the ESA.
I knew that even if I applied for ESA, I would be refused because I had this small income. The Jobcentre would continue to try and make me employable for no reason other than that was what the rules said. So I checked that my old age pension was secure through qualifying years of employment, and that I would get that in full when the time came. I then asked Ebury House, the Jobcentre in Aberdeen, to end the ESA. I decided to fall back on my occupational pension, and my wife and I would muddle by until we got our State Pensions.
Earlier in the year I received two letters advising me of Tax Coding Changes because of the £10K allowance before tax. This lifted me out of the tax regime altogether as far as income was concerned. So it becomes clear that “unpaid tax” arising from the ESA, was supposed to have been collected by means of PAYE through any employment I did. As we all know many of us are indeed disabled and incapacitated and do not and cannot work, despite the DWP, ATOS or Tribunals telling us otherwise. That is the experience of many disabled people.
So the rules do not allow collection where the non-taxable allowance of £10,000 per annum has taken someone out of income tax.
Put simply, as I pay none, or very little income tax anyway, the Taxman is obliged to ask for the money in a lump sum.
So, I have to pay hundreds of pounds in unpaid tax that I did not ask for, that was introduced by the DWP as tax on ESA in the first place.
Now to be fair to HMRC, they state clearly in their letter “that is their understanding that I may not be aware of this unpaid tax”. So they know what is going on, but they have to stick by the rules.
On the Tax Helpline, it became clear, the extremely helpful lady, understood fully my position, but the only two solutions she could offer were to pay in full, or speak to the Recovery Section who would advise on methods of payment.
In short, work out a payment plan.
No wonder I am shaking my head in disbelief at this. I think there will be a lot more cases arising soon.