esa and your tax

hi, just wanted to share an interesting conversation Ive had with our lovely tax office. i was off work with bc from oct 09 to jan 11. i recieced full pay for 6 months, then ESA, till approx Oct 10 where they stopped it after a requested health check from them.
I have now recieved a tax bill for over £600, which I owe from when I was recieving ESA, apparentley the tax office cannot claim the tax whilst you are recieving the benefit, but it is tax payable. Now I’m just a normal joe bloggs, I know nothing about tax payments, never being selfemployed, as im sure most of us dont realise this, so please, check if your on a benefit whether you are going to be hit with a tax bill at a later date:(

Hi I am certainly not an expert but I would query that if I were you!!! For starters you have to “earn” over a certain amount each tax year before you pay tax! And I wouldn’t have thought 10 months worth of ESA brings you anywhere near that amount??? I would check your personal tax code and get some expert advise before handing over any money to the tax people!!!
Also not sure about ESA but with JSA you don’t pay tax on it however it is taken into account for the tax year if you start work but you don’t get handed a tax bill I would have thought it was the same for both though!!!

Hope you get it sorted


Hi. I spoke to my accountant today who said generally benefits are tax free. How about phoning the Macmillan finance people for clarification?

Sadie Xx Xx

There are two sorts, contributions based, which is taxable, and income related, which is not taxable - see the link below.

tried to get on your link roadrunner but wasnt able to. my tax was worked out that i had 7000 from work and 3000 from esa in the tax year 10/11 which is correct, my personal allowance is 6475 so the difference is tax deductable, hence my bill for £600, upon returning to work in Jan this year my wages dept never stopped me any tax till April, which I stupidly thought was because I hadnt earned enough. I have now got to find the money to pay this, i have queried it with tax office, but they assure me i owe them this money, what i feel is unfair is that i was never made aware this could happen.

Ouch for gods sake!!! So you’ve got to somehow spirit £600 out of thin air? Great.

Hi all
I have also recieved a tax bill in the last week for nearly £500! Apparently it is because last year I was receiving esa whilst also getting half pay from work whilst off sick. I was expecting it to be honest because my mum recently got a bill for the same reason for over £1100! Thankfully, I think they owed me money initially from paying higher rate tax at the start of the financial year when I was still receiving full pay, so I would have owed them more if this wasn’t the case.
I’m just going to pay it and try and forget about it :frowning:
Tina x

maybe all benefits should come with a warning…’ we will help you for now…but we BITE BACK’ lol

somerset lady

try this link instead

Based on your info, the £600 tax bill is correct assuming that your esa is taxable. You used up all your personal allowance through your employment income, so the esa would be taxed at 20%.

You should be able to get this bill ‘coded out’ if you are still in employment. This means that your code number for 2012/13 would be adjusted to collect the tax owed through the PAYE system in the 2012/13 tax year. So you would pay an extra £50 tax every month. You would need to ring the tax office to ask them to do this for you. If you are not in employment, ask for a ‘time to pay’ arrangement - you have to tell them you can’t afford to pay it in a lump sum - where you agree to pay in instalments (tho’ they will charge interest on this and it is getting harder to get them to agree to these arrangements). Either way, call them straight away so it is on record that you are trying to sort it out.

thanks rtoadrunner, have spoke to them and waiting to hear if i can make mothly payments