Tax on ESA

StuartM0RXX wrote: I have been disabled for many years with a severe back injury and my incapacity benefit was tax free and that was so until ESA. How can they do this as it was specially excluded in the original legislation. Can you help please.

I am afraid that there is no way around this, the current Government decided not to include the Tax disregard in the Transfer protection.

To be clear, your ESA(CB) not any ESA(IR) payments that you receive are liable to tax, the DWP do not process income tax as it is assumed that any taxable benefits a claimant receives are encompassed within their Tax Free Allowance, so you need to inform HMRC about the change and if your total taxable income exceeds your allowance then then they will adjust your Tax Code so that increased deductions are made from your other income.

I hope that makes sense

Gordon