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New style ESA and effect of taking lump sum from
- Elidor
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5 years 9 hours ago #247638 by Elidor
New style ESA and effect of taking lump sum from was created by Elidor
My partner stopped working due to decompensated liver disease last October. He is still employed but doesnt get paid and has applied for 'new style' ESA. As this is the only income he has coming in (assessment phase) he is thinking of drawing down some of a money purchase scheme pension (worth about 25k). If he takes a tax free lump sum from this, would his esa be affected? Also, will his tax free allowed pension income for the year affect any esa?Trying to work out the best way of using the money. Would he be expected to take this money as no income atm apart from esa. He is 58 and unlikely to go back to work. Any help would be appreciated. He cant claim any other benefits due to my savings apart from PIP. Have contacted the Pensions advisory service who dont know.
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- Gary
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5 years 9 hours ago #247640 by Gary
Nothing on this board constitutes legal advice - always consult a professional about specific problems
Replied by Gary on topic New style ESA and effect of taking lump sum from
Hi Eleanor
Providing he has at least 50 weeks of NI Contributions in both of the Tax Years 2017-2018 and 2018-2019 then he can make a claim for New Style ESA, this is a Contribution Based benefit so your household income, with the exception of any pension income you receive, is disregarded as are your assets and savings.
www.gov.uk/employment-support-allowance/how-to-claim
If he is only receiving 'New Style' Contribution Based ESA then a lump sum will not affect his new style ESA but a regular payment will. If the pension is more then £85/week then there will be a £1/week deduction for every £2 in excess of the £85.
If you are receiving any Universal Credit, either in part or in whole, then it will affect your UC.
First, there is an assets and savings rule if you take a lump sum, see
Asset and savings rule for ESA(IR)
www.turn2us.org.uk/Benefit-guides/Univer...avings#guide-content
Secondly, any regular payments will be deducted £ for £ from any UC that you receive.
If the UC is fully eroded then you will lose access to passported benefits such as free prescriptions and dental care.
Gary
Providing he has at least 50 weeks of NI Contributions in both of the Tax Years 2017-2018 and 2018-2019 then he can make a claim for New Style ESA, this is a Contribution Based benefit so your household income, with the exception of any pension income you receive, is disregarded as are your assets and savings.
www.gov.uk/employment-support-allowance/how-to-claim
If he is only receiving 'New Style' Contribution Based ESA then a lump sum will not affect his new style ESA but a regular payment will. If the pension is more then £85/week then there will be a £1/week deduction for every £2 in excess of the £85.
If you are receiving any Universal Credit, either in part or in whole, then it will affect your UC.
First, there is an assets and savings rule if you take a lump sum, see
Asset and savings rule for ESA(IR)
www.turn2us.org.uk/Benefit-guides/Univer...avings#guide-content
Secondly, any regular payments will be deducted £ for £ from any UC that you receive.
If the UC is fully eroded then you will lose access to passported benefits such as free prescriptions and dental care.
Gary
Nothing on this board constitutes legal advice - always consult a professional about specific problems
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- Elidor
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4 years 11 months ago #247661 by Elidor
Replied by Elidor on topic New style ESA and effect of taking lump sum from
Thanks Gary
Could he take from his pension, £12500 (his annual tax free allowance) as a lump sum and would this be disregarded
for new style esa?
Also would the tax free lump sum of around 5k be disregarded as well?
It's all quite complicated.
The links you gave me didnt seem to address this.
Many thanks
Could he take from his pension, £12500 (his annual tax free allowance) as a lump sum and would this be disregarded
for new style esa?
Also would the tax free lump sum of around 5k be disregarded as well?
It's all quite complicated.
The links you gave me didnt seem to address this.
Many thanks
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- Gordon
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4 years 11 months ago #247686 by Gordon
Nothing on this board constitutes legal advice - always consult a professional about specific problems
Replied by Gordon on topic New style ESA and effect of taking lump sum from
Eleanor
He should be able to make one drawdown without it affecting his ESA as it will be treated a capital and this does not affect NS ESA. a second one may be a problem, whilst we have not seen it here I have seen it reported on other forums that a second and subsequent drawdown can be treated as income and this can affect hos ESA.
For pension income, there is an £85/week disregard followed by a £1/week deduction for every £2 of pension in excess of the £85.
Gordon
He should be able to make one drawdown without it affecting his ESA as it will be treated a capital and this does not affect NS ESA. a second one may be a problem, whilst we have not seen it here I have seen it reported on other forums that a second and subsequent drawdown can be treated as income and this can affect hos ESA.
For pension income, there is an £85/week disregard followed by a £1/week deduction for every £2 of pension in excess of the £85.
Gordon
Nothing on this board constitutes legal advice - always consult a professional about specific problems
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