Long term incap benefit and Tax

[jossmer]

Hello there.
Having recently gone back on to incapacity benefit (01.05.08 ) I qualified for the longterm rate. This was because I had been on long term incap benefit unto September 2006.

My question is about tax. I get an occupational pension from a previous employer which is approx £8k a year. My tax allowance of 543T has now been reduced by £4600 due to me getting longterm incapacity benefit.

The actual amount of benefit per year is £4600. How are HM reveue allowed to remove £4600 from my tax code of 543T?

As a result the tax I pay on my pension has now increased by £78.80...a month.

I spoke with incap benefit today about this. They say I should not be taxed because this claim is linked to the period 2006 2 year benefit link protection.

Help please i feel I am being conned here by the tax man.

Any advice please

in despration

jossmer

[tiglet]

Have you tried calling them or making an appointment? It could simply be a mistake or they may be unaware of the circumstances. they should at least be able to point you in the direction of a publication which explains this so that you can see if you have a right to appeal.

[jossmer]

Originally Posted by tiglet

Have you tried calling them or making an appointment? It could simply be a mistake or they may be unaware of the circumstances. they should at least be able to point you in the direction of a publication which explains this so that you can see if you have a right to appeal.

Thank you for the reply. I have since rang JCP back and spoke to a manager, who again said the problem lies with the tax man. Rather than phone these people again, I shall write them with my concerns. SO much seems to be forgotten when speaking with the tax office.
I understand that folk on incap benefit who have no other income have the amount deducted from thier tax code. This is fine because they do not lose out as such. WHere as because I have a pension I lose £4600 of my tax code.
To me this effectively make me paying 100% tax on the incap benefit I recieve.
£4600 in benefit minus £4600 from my tax code = 100% tax
If anything, the amounts from my pension and incap benefit should be added together and tax paid at 20p in the pound, not take off £4600.
Maybe I'm looking at this to simplistically?

Is there anyone else out there who is in reciept of pension of working age and claiming Incap benefit? What is your position with tax?

[tiglet]

Sorry, no, i meant make an appointment at your local tax office - before you go done any other route, I would ensure it's not simply a mistake.

However, when people are getting benefits, usually other income is taken into consideration or taxed to some level.

[babbles]

Originally Posted by jossmer

Hello there.
Having recently gone back on to incapacity benefit (01.05.08 ) I qualified for the longterm rate. This was because I had been on long term incap benefit unto September 2006.

My question is about tax. I get an occupational pension from a previous employer which is approx £8k a year. My tax allowance of 543T has now been reduced by £4600 due to me getting longterm incapacity benefit.

The actual amount of benefit per year is £4600. How are HM reveue allowed to remove £4600 from my tax code of 543T?

As a result the tax I pay on my pension has now increased by £78.80...a month.

I spoke with incap benefit today about this. They say I should not be taxed because this claim is linked to the period 2006 2 year benefit link protection.

Help please i feel I am being conned here by the tax man.

Any advice please

in despration

jossmer

I am in exactly the same position, the tax on my ill health pension has increased due to my receiving long term IB. When I lived out of the country for a while, I paid no tax on my pension, due to the double tax treaty within Europe, but the moment I arrived back, the tax form was on the doorstep. Is there any point phoning the tax office and asking why, when I am incapacitated, that they should take the money off me? I don't understand it at all -

[sugg1]

My Husband is on long term Incap benefit ,but due to having a navy pension he only gets £24 aweek ,he was getting £25 aweek but they reduced that by a pound saying something about his pension increasing.

we have not noticed anything diffrent like you have mentioned above about the tax code ect.

[adamrao]

Jossmer

I am no tax expert but know that you are particularly at risk of an incorrect tax code if you:

• Have more than one job
• Have a pension and also work
• Are in receipt of a taxable benefit (like Carer’s Allowance or Incapacity Benefit) and also work or have other income

Your Annual Private Pension is £8000
Your Annual Incap Benefit is £4600
Total Annual income is 8000 + 4600 = £12600
Personal Allowance is £5435 (tax free)
Taxable Income 12600 - 5435 = £7165

But as your Incap benefit is linked with your previous Incap Ben. claim you should not be taxed on it. I think your monthly tax is not more than £35 a month and £78.80 is quite high.

You need to contact your Tax Office straight away.