NIC's hierarchy for ESA

Lostatsea

Hello, I have been refused ESA on the grounds of not enough NIC'S.

 I had been a self supporting, low income, self employed for ten years, always paying voluntary class 2 nic's. I know ESA is based on the last two years of nic's and that only class 1 and 2 count, class 3 from UC does not count.

So, at the start of the pandemic I started claiming UC but continued to try to trade as self employed, only earning a few thousand in two years. My health went backwards so I stopped being self employed in april 2022(registering sick notes from jan22) and was put into LCWRA mid 22.

My confusion is, I paid my class 2 voluntarily BUT the class 3 I recieved from UC has been used as my qualifying contributions for ESA, so I am not eligible.  To confuse you even more, in Jan-2022 the government gave a 1 month exstension for self employed return filling. I submitted my return in the Feb exstension but was not given the option to pay my class 2 as normal, so the submitting deadline had been exstended but the payment window for NI online, had not. Realising this, a year later on, I called NI and got a payment refernce number and paid my class2.  On checking my NI records, none of the 2020-21 class 2 is showing, only the class3 from UC. And for 2021-2022 tax year two thirds of what I paid, on time - online, counts(with the rest showing as unused?) and the UC class 3 payments for the rest?

So, I am confused. I can understand that I missed the online self assement payment window for the tax year upto april 2021 due to the return filling exstension due to covid, but I have proof(payment reference on bank statement) that I did make the payment at a later date, direct to them- though this is not showing on my NI record, not even as unused.

And I can not understand why the 2021-22 record shows they only used part of my voluntary class 2's, it is as though when I started my UC50 journey (the form for fit for work assesment) that they have automatically registered the class 3 payments ahead of my class2. So my class2 counted until I was awarded LCWRA at which point my class 2 for the previous four months was dismissed and the class 3 replaced it.

Hence my hierarcy question.

calcotti

If you paid voluntary Class 2 NI for the two years 2020-21 and 2021-22 then you do qualify for new style ESA. If you did not paid in those years but were registered aa self employed you you can the voluntary Class 2 retrospectively and they would be taken into account 6 weeks after there are paid. The tax return dates are not irrelevant.

From your description it looks as if HMRC record of your payments may be correct. DWP can only make their decision based on the information provided by HMRC.

However remember that if you are still getting UC then getting ESA will not increase your income because the ESA will be deducted from the UC.

flour

@Lostatsea

From your ESA decision letter telling you that you are 'not entitled to payments but are entitled to NI credits' it should tell you which years they have used in their assessment. Can you share that here?
I am also wondering if due to the of huge volume of people wanting to have their NI record paid up due to the state pension July deadline that HMRC may not have updated your record still because of the backlog?
I would do a subject access request for your NI record by going to:
https://www.tax.service.gov.uk/shortforms/form/DPU_SAR_NI
If you fill this in it should give you all the information - possibly more than the online account shows?
Then if needs be you can forward a copy to ESA to point out the error of their record. Or the print out from HMRC may show something up like an error on their part. If you have the full copy then you'll be singing from the same hymn sheet as HMRC and DWP.

In addition, as @calcotti says ESA and UC don't make you better off in the cash amounts you get, but that's not why you'd claim both. You claim both because if you come in to money such as a significant inheritance or if your partner started earning more at work then you can loose your UC but retain your ESA. Crucially, you can't claim ESA later on.

Example of UC without ESA
Before coming in to money   UC of £758.80 monthly
After coming in to money  UC of £0 - claim gets closed.

Example of UC and ESA
Before coming in to money   ESA of £561 monthly topped up by UC to £758.80
After coming in to money   ESA of £561 monthly - claim keeps going

I find it helps to think of the two claims like two separate trains running side by side, but then one stops but the other keeps going.

Hope this helps

Lostatsea

Thank you both. Flour, it is 20/21-21/22. I will look into a subject access request. Do you both think that the date order of payment is critical, and that only one type of credit- the first paid, can count.

calcotti

Thanks to flour for adding the comments about NI classes. I should have included that in the original reply, at the time I was thinking only about the fact that the ESA outcome will make no difference to current income.

Lostatsea said:

Do you both think that the date order of payment is critical, and that only one type of credit- the first paid, can count.

It shouldn't it should and Class 1 or Class 2 contributions should need priority.

flour

pleasure @calcotti

@Lostatsea I do not think it makes any difference at all who paid what first (expect for as calcotti says, late Class 2 NICS delay the payment start date) but there is no hierarchy.
 
If you have ever seen a DWP ESA computer print out (looks like something from the 1970's) for each tax year it only records Class 1 and Class 2. If I can find a copy of one I'll try and post it here so you can see what they look like.

What I'm getting at, is, I don't think the DWP make a note of Class 3 contributions on the ESA record. You could also do a subject access request to the DWP for the ESA records while you're at it. Both will come within a month, which is quite quick in the world of benefits.

Do keep up updated incase we can be of more help.