Benefit entitlement and Tax Refunds

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    Can anybody help please? ❓
    An assessment has been made using the income provided even though the customer has confirmed that her wages are below the tax threshold, an emergency tax code is present and a refund of all tax paid will be made.

    I’ve suggested that the assessment is incorrect as we can check when the tax refund is made and if wages will increase to the gross amount. I believe that with this information we can actually pay benefit at a the correct (lesser) rate. The assessor disagrees.

    As this does not appear to be covered directly by Regs does anybody have any comments? Is it not more about interpretation, good practice and paying the correct benefit on the information we have (and can gather)?


    I think the Regs are very clear indeed. Reg 36(3) says you cannot include as earnings “any amount deducted by way of income tax”.

    The only exception is where you are working from an estimate of likely future earnings that you have required the employer to “furnish” under Reg 29(2)(b).

    I would tell the claimant that she must report the increase in her net earnings as and when the tax gets sorted out – this is a change of circs that will affect her HB (although the one-off tax refund will not count as income). But for now I cannot see how it is right to add the tax back in.


    There’s a bit of a disagreement in the office around this matter. A claimant previously on I.S. started work in December and provided his first monthly payslip, showing emergency tax. HB was calculated with reference to the net income – but only from mid-January as he had an extended payment until then. At the end of January he provided his second monthly payslip, showing the normal tax code. One side says to apply from mid-January (remember the EP) as the pay is for the whole of January. That creates an overpayment. The other side says to apply as a change of circumstances from the beginning of February, i.e. the Monday following the date of the payslip.
    Any opinions?

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