ESA and tax credits advice needed

Up until last July I was self-employed but not earning much so I received working tax credit. In July I stopped work and registered for ESA. I've since had various assessments and have been placed in the work-related category.

My tax credits included a disability element and I was (initially) pleased to discover the payments would continue for the first 28 weeks of sickness. It's currently worth £100.97/week.

My new income-based ESA entitlement is £89.80/week but because of the WTC I receive nothing. However I do receive £89.90/week as contribution-based ESA.

I have put in a claim for mortgage interest - worth £560/month. I just rang up about that and was told I wouldn't be eligible as I received contribution-based rather than income-based ESA (not confirmed - someone is supposed to ring back about that).

Also, because of the WTCs I don't qualify for Council Tax Benefit (which would be worth about £20/week).

On this basis it looks like my Working Tax Credits are costing me far more than they're worth. Can this be right? If so, can I unilaterally cancel my tax credit claim and so restore my eligibility for the mortgage and council tax relief?

(And without WTC would I receive both income-based and contribution-based ESA or would the former simply replace the latter?)

I find the whole thing really confusing (including their explanatory letters) so would be very grateful for any advice.

Originally Posted by nks22

I have put in a claim for mortgage interest - worth £560/month. I just rang up about that and was told I wouldn't be eligible as I received contribution-based rather than income-based ESA (not confirmed - someone is supposed to ring back about that).

This isn't true as you can get both income and contribution based.

When your mortgage costs are added after 13 weeks, this will bring you into entitlement to the income based top-up.

And your tax credits should end 4 weeks after stopping work, not 28.

This isn't true as you can get both income and contribution based.

So what would I be receiving if I didn't get WTCs? Not both at the same time, surely - i.e. 2 x £89.90?

When your mortgage costs are added after 13 weeks, this will bring you into entitlement to the income based top-up.

That seems logical. Even so I still seem to be worse off from receiving WTC with Council Tax.

And your tax credits should end 4 weeks after stopping work, not 28.

It's 28 weeks if you stop work because of sickness. (See HM Revenue & Customs: Tax credits when you can't work due to illness )

Thanks.

Thanks, that all makes sense. I've just passed the 13-weeks so should now be eligible for the mortgage relief (and my lender has completed and returned the form to the DSS). I believe they can be a bit slow to process claims, though.

They have a backlog, your local process centre mortgage team deal with JSA and I.S claim as well so it is just a bit busy at the moment but give them a ring if you dont hear by a few weeks

Originally Posted by nks22

So what would I be receiving if I didn't get WTCs? Not both at the same time, surely - i.e. 2 x £89.90?

No because the cb-ESA counts as income, so the ib-ESA just tops up the difference.

If your housing costs are £560 a month then you will still get a small ib-ESA top up, from £190 income to £219 a week (£89.8 + £129 housing costs). Once you get any ib-ESA you are guaranteed full council tax benefit.

(And thanks for the tax credits info, I'll store that in the knowledge bank.)

Originally Posted by MIKEY DABODEE

If your contributions run out then you would go over to IB ESA and still get £89.90

Just one comment about your advice, which is good (as always). Unlike JSA, with ESA your contributions don't "run out" after 6 months. If you qualify for cont-based ESA, you will continue to be paid that until you are no longer entitled to the benefit.

thanks Antone, must be like IB
ESA sure is one complicted benefit

Thanks for all your contributions.

Well I've just rung up again about my benefit, not having received the promised call-back about my mortgage interest payment. The person I spoke to read out from my records something like "not eligible as excess income due to tax credits". She said she'd again request a call-back so someone can discuss it with me but it leaves me wondering about my tax credits.

My initial 13 weeks was up on 18 October since when I expected to be receiving £130/week for mortgage interest. Instead I've been getting £101/week tax credits (which also costs me £18/week in council tax benefit). So it seems that my WTC is losing me £48/week, which surely can't be right, can it?

Had an exciting update on my benefit. The DSS (or whatever they're now called) are paying my mortgage interest from 21 October. I'll receive £163.28/week (based on their flat rate interest allowance of, I believe, 6.1%) plus my £89.80/week ESA. However from that they'll deduct my WTC income of £95.06/week - leaving a net £158.02/week - give me 10p and send the rest direct to the mortgage company. And I'll now qualify for Council Tax benefit.

(I'm not really complaining as I'm a beneficiary of the policy but it does seem a bit odd for the government to pay mortgage interest at a flat rate rather than at the rate an individual is actually paying. My own rate is currently 4.84% and there must be others with much lower rates while a few may be out of pocket and so falling into arrears.)