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ESA & one off lump sum pension payment
- Little Jim
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8 years 6 months ago #141401 by Little Jim
ESA & one off lump sum pension payment was created by Little Jim
Hi
I have several very small pensions, I decided to take a one off lump of £4000 after 25% tax free & 20% taxes were taken off.
Now i have had my tax code altered from 1060 to 7266,they have a note which says that the DWP (ESA) will use this code when they pay you.
I am on CB ESA. i have no other income.
Can you explain this?
thank You
I have several very small pensions, I decided to take a one off lump of £4000 after 25% tax free & 20% taxes were taken off.
Now i have had my tax code altered from 1060 to 7266,they have a note which says that the DWP (ESA) will use this code when they pay you.
I am on CB ESA. i have no other income.
Can you explain this?
thank You
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- Gordon
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8 years 6 months ago #141410 by Gordon
Contribution Based ESA is liable to Tax, that doesn't mean that you will pay it as the amount payable with ESA(CB) is well within your personal allowance, however, if you have additional income and the total of all your taxable income is more than your allowance then you will pay tax.
I'm a bit confused as to why they think your tax code is relevant to the DWP, it's not, as they do not deduct tax from benefits, this will always be done through any additional income.
It is possible that when you get to the end of the financial year next April that you will be able to claim the tax from your pension payment back.
Gordon
Nothing on this board constitutes legal advice - always consult a professional about specific problems
Replied by Gordon on topic ESA & one off lump sum pension payment
Little Jim wrote: Hi
I have several very small pensions, I decided to take a one off lump of £4000 after 25% tax free & 20% taxes were taken off.
Now i have had my tax code altered from 1060 to 7266,they have a note which says that the DWP (ESA) will use this code when they pay you.
I am on CB ESA. i have no other income.
Can you explain this?
thank You
Contribution Based ESA is liable to Tax, that doesn't mean that you will pay it as the amount payable with ESA(CB) is well within your personal allowance, however, if you have additional income and the total of all your taxable income is more than your allowance then you will pay tax.
I'm a bit confused as to why they think your tax code is relevant to the DWP, it's not, as they do not deduct tax from benefits, this will always be done through any additional income.
It is possible that when you get to the end of the financial year next April that you will be able to claim the tax from your pension payment back.
Gordon
Nothing on this board constitutes legal advice - always consult a professional about specific problems
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- Little Jim
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8 years 6 months ago #141430 by Little Jim
Replied by Little Jim on topic ESA & one off lump sum pension payment
Thank You Gordon.
I have an appointment with tax officer this afternoon, will let you know outcome.
I have an appointment with tax officer this afternoon, will let you know outcome.
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- Little Jim
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8 years 6 months ago #141472 by Little Jim
Replied by Little Jim on topic ESA & one off lump sum pension payment
An update
I was told that when you take a small pension pot as a lump sum (Under £10000)
As the tax office do not know it is a lump sum payment ,they ASSUME it is a pension which will be paid monthly by insurance company.
Also found out that Gordon was right, that DWP do not stop tax from your benefits.
I was issued with 2 different tax codes, Which were very confusing if you don't know alot about taxation.
She said that people had gone in there saying that they had not slept for a week worrying about this type of problem and left knowing that they would get a tax rebate!
All because the wording use is very confusing!
I was told that when you take a small pension pot as a lump sum (Under £10000)
As the tax office do not know it is a lump sum payment ,they ASSUME it is a pension which will be paid monthly by insurance company.
Also found out that Gordon was right, that DWP do not stop tax from your benefits.
I was issued with 2 different tax codes, Which were very confusing if you don't know alot about taxation.
She said that people had gone in there saying that they had not slept for a week worrying about this type of problem and left knowing that they would get a tax rebate!
All because the wording use is very confusing!
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- tango
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8 years 6 months ago #141491 by tango
Replied by tango on topic ESA & one off lump sum pension payment
hi there I am on contribution based esa and cashed a pension pot in as well and paid tax. you don't have to wait until next april to get your tax back, just ring the tax office you deal with and ask for form P53Z. and fill the form in and return it with the p60 that your pension provider issued with when you cashed in your pension all in all it took about 8 weeks before I received my tax rebate.
regards tango
regards tango
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