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Calculation of Tax Credits involving passporting
I have a query about the “passporting” aspect of Income Based Employment & Support Allowance (ESA (IB)) and Tax Credits. I understand that when a client is in receipt of ESA (IB) they are automatically entitled to their full entitlement of Child Tax Credit and Working Tax Credit.
My question is: what is meant, in a legal sense, by “in receipt of ESA (IB)”?
My client lives with a partner, due to their income, he is not receiving payment any ESA. But he is in receipt of what I would call a “credits” claim, which is to say that he is receiving National Insurance credits.
He is subject to the Work Capacity Assessment, he receives letters from the Department of Work & Pensions about his “ESA (IB)” claim, so naturally he told HMRC that he was in receipt of this benefit.
They have informed him that he is not, and have raised a substantial overpayment.
credits wont count for passporting them to full tc. be interesting to see if there is a route for them not to recover the over payment though as its a pretty understandable mistake for a claimant to make.
why can’t partner claim TC? and if partner can, worth doing the calculation re offsetting. particularly given the circs where DWP is telling him he’s got ESA ......
why can’t partner claim TC? and if partner can, worth doing the calculation re offsetting. particularly given the circs where DWP is telling him he’s got ESA ......
dont think you can off set a tc overpayment against dwp benefits to reduce an overpayment (if thats what you mean).
no i was thinking about the tax credits only
Just wondering how IB ESA could ever passport someone to full WTC? WTC can only be claimed by the person working, not the ESA claimant, and any IB ESA award would necessarily have to take account of the household income including WTC. If this scenario were correct then it would not matter how much the worker earned, WTC would be paid in full and that can’t be right, can it?
You can get into a perpetual spiral - I’ve had clients where this has happened before - tax credits are a joint claim so one can be working (under 24 hours) and one on irESA. The ir ESA passports to full WTC, the full WTC then takes them out of entitlement on income grounds for irESA so that stops. The passporting then stops so WTC goes down bringing entitlement to irESA back in thus passporting to full WTC and so on - it can be a bit of a logistical nightmare…
You can get into a perpetual spiral.
Same with Pension Credit
You can get into a perpetual spiral - I’ve had clients where this has happened before - tax credits are a joint claim so one can be working (under 24 hours) and one on irESA. The ir ESA passports to full WTC, the full WTC then takes them out of entitlement on income grounds for irESA so that stops. The passporting then stops so WTC goes down bringing entitlement to irESA back in thus passporting to full WTC and so on - it can be a bit of a logistical nightmare…
Thanks Daphne
You can get into a perpetual spiral - I’ve had clients where this has happened before - tax credits are a joint claim so one can be working (under 24 hours) and one on irESA. The ir ESA passports to full WTC, the full WTC then takes them out of entitlement on income grounds for irESA so that stops. The passporting then stops so WTC goes down bringing entitlement to irESA back in thus passporting to full WTC and so on - it can be a bit of a logistical nightmare…
had this as well.
couple with a large applicable amount due to disability premiums, carers premium and housing cost element. one of couple working, claiming wtc but small entitlement to is houisng costs. this is entitlement meant full wtc…which took them over is.
from memory here but one wasnt a change we had to notify.
The circularity issue has been an ongoing problem for a number of years. We had many discussions with DWP and HMRC policy teams a few years ago and came up with some potential changes to stop this happening, but we were cautious that some of the changes would have made some people worse off as not everyone gets caught in circularity. So we didn’t pursue a fix any further, and left it that we would flag individual cases up to HMRC and DWP to consider whether they could do anything to stop the circularity.
Victoria