Any tax credits experts? I fear I’ve really messed up and don’t know what to do!

[LifeIn2022]

I claim CTC and WTC. I also claim ‘New Style ESA’ for myself as I am disabled.

I did not realise ESA is counted as income for tax credits; it has only dawned on me today after a conversation with a friend over carers allowance and she advised it’s taxable and counts as income.

Upon checking my tax account, I can see I have an estimated income tax figure even though I’m not employed. I will of course contact HMRC to update my details but I’m now obviously worried. I’ve been oblivious for two years as I didn’t think ESA counted (income related does not count) . I’m going to owe a fortune .

What is likely to happen? Will they stop my whole claim or allow me to pay it back over time?

I would imagine they will let you pay back over time. I started work in September which meant I have to repay what I received this tax year as my earnings take is over the limit to receive anything. When I called they were really helpful and would have accepted much less per month than what I offered- but I just want to get it paid off. Good luck.

They will reduce your award to cover the back payment.

I am so very confused. I can’t be claiming new style ESA as I don’t receive UC. I must be on contribution based which is taxable .

Can I negotiate how much I pay back each month? Or will they decide ? Things are already tight due to rising prices. I can’t believe I’ve got this so wrong.

I’m even more confused I can’t get through to the telephone line so I’ve tried to go online to update my details and there is nowhere that mentions other benefits. I can only make changes to my employment income , not benefit income.

HMRC are obviously aware I receive ESA as I have a tax code. I’m beginning to wonder if I’ve got myself in a tiz and misunderstood the whole thing

Does anyone know the system? I’m in a real tiz and I can’t get through to their helpline. I don’t want this to be hanging over me all weekend

There is nowhere online to say I receive ESA , but there is for carers allowance which also is classed as income. Google suggests ESA is classed as income but I can’t find any other information about how it affects tax credits

You need to give them a ring. I think if you have been overpaid they adjust your award going forward and you agree a payment plan for money you were paid but not entitled to.

When you google it says contribution based 'new style' ESA is counted as income for tax credits. So if you are over the income threshold (usually £6,420 if you get both WTC and CTC) you will lose 41p of tax credits for every £1 you get of ESA. However up to £2500 of any increase on the previous tax year can be disregarded.

You do need to read about it and do the maths yourself if you can as TC can get the calculations very wrong sometimes.

@2redcats so does that mean I can earn £6,420 before they will deduct my ESA from my tax credits? ESA is roughly just under £6k for the year . I have no other income. So I might be ok?

I have called them and reported. They said I won’t see any overpayments until the end of the tax year but my payments could be reduced by as much as 50%

I have two disabled children and I’m disabled myself. This is going to hit us hard .

Yes, its gone up a few £ for this year actually, I was looking at the previous year:

www.gov.uk/government/publications/rates-and-allowances-tax-credits-child-benefit-and-guardians-allowance/tax-credits-child-benefit-and-guardians-allowance

I don't understand how you get working tax credits and new style ESA ? Are you still working? If not then surely the WTC should have stopped when SSP ended?

@Babyroobs

I don't understand how you get working tax credits and new style ESA ? Are you still working? If not then surely the WTC should have stopped when SSP ended?

Sorry just seen you are not employed, so how are you getting WTC?

have you had a work capability assessment yet on new style ESA ? Have you looked into whether you would be better off on UC. Do you receive PIP yourself?

@Babyroobs it’s not new style ESA, I got confused . It’s contributory ESA. We were told we still got WTC as DH is on a low income. I now know, had my ESA been taken in to account , we would not be getting WTC; this is where the overpayment will come in.

I do claim PIP and I’m in the ESA support group as of almost two years ago. I had no idea it was counted as income until now.

[quote LifeIn2022]@Babyroobs it’s not new style ESA, I got confused . It’s contributory ESA. We were told we still got WTC as DH is on a low income. I now know, had my ESA been taken in to account , we would not be getting WTC; this is where the overpayment will come in.

I do claim PIP and I’m in the ESA support group as of almost two years ago. I had no idea it was counted as income until now.[/quote]
Ok. New style ESA is also contributions based ESA.
When your wtc stop it may be worth you looking into whether you would be better off on UC.
I think the disabled child elements for middle rate DLA are slightly less on UC but you would get the LCWRA element of Uc as you are in the support group and also your dh could claim the carers element of UC either for one of your children or yourself. He can claim this carers element even if working. There is no earnings limit like there is for carers allowance. Unless you have savings over 16k which would rule you out of claiming UC, it is definately worth asking somewhere like CAB to do a better off calculation for you.

I do think we would be better off on UC but I’m not sure we would survive the wait right now for payment. They will also take the the TC overpayment from UC .

Can I ask TC to spread the repayments over longer? 50% is going to be a huge loss.