Good evening everyone, on Dec 23rd I will be retired from work due to Ill health and as a consequence I will receive my occupational pension early, I will also be putting a claim in for ESA.

I know I will have to pay tax but how do I pay it? Will it all be deducted from my pension. I would like to avoid having an adjustment in my tax code for the next tax year while they recoupe the tax I owe on any benefit I might receive this tax year, I would much prefer to pay the correct tax this year…if that makes sense.

Thanks Jan x

Hello Jan,

When I retired everything was done automatically. I think they stuck me on a temporary code. After applying for ESA and finally getting to the support group, I had some backdated. (Hence my EESA post) I also filled in a council tax discount form, and my wife was able to claim carer’s allowance. Mind you she has now found some excellent part time work so I have to inform the appropriate people-no rest for the retired!

Best wishes, Steve x

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Thanks Steve, I wanted to avoid having my tax code messed with. I was on the sick for nine months about four years ago, I recieved sick money from the state when my six months full pay from work ended, they then changed my tax code the following year as I owed tax from government sick money. Oh well I guess it will sort itself out in the end.

Jan x

Hi Jan,

You will most likely be sent a Tax Form, for which you will have to declare your income, assets, expected annual interests, Charity donations, etc…etc… Its been awhile for me to remember. Once they have this you would be placed on a temporary tax code. Tax would then be taken from your pension allowance as your ESA allowance is classed as part of your personal tax allowance. This code would be assessed at the next year and a new code issued to return/deduct balance of tax owed or to be credited.

I think, thats what they did to me. Andy

Thanks Andy, I can’t wait till it’s all sorted and then I can forget about it, at the moment it’s all consuming


ESA (contribution based) is taxable, but ESA (income based) is not taxable - Income Tax: Tax-free and taxable state benefits - GOV.UK

So long as you have paid sufficient National Insurance contributions during the past 3 years you may get ESA (contribution based) which lasts for a year before moving to ESA (income based).