PAYE77212 | PAYE operation: employment and support allowance: PB3 - IB to ESA reassessment (Action Guide)

From HM Revenue & Customs · PAYE Manual

Incapacity Benefit (IB) reassessment claims are normally submitted to HMRC electronically using the DWP Job Seeker’s Allowance Payment System (JSAPS).

Where the claim cannot be notified electronically, PB3 forms headed ‘IB Reassessment Claim’ will be issued by DWP to notify HMRC that the individual has moved from receiving IB to receiving Employment Support Allowances (ESA).

To process forms PB3, follow steps 1 - 54 below. This guide is presented as follows

Initial action

Steps 1 - 3

Latest primary employment is IB - live or ceased

Steps 4 - 7

Latest primary is occupational pension or RACS and secondary IB is held - live or ceased

Steps 8 - 17

Latest primary is occupational pension or RACS or employment and no secondary IB employment is held

Steps 18 - 26

Latest primary is employment and secondary IB employment is held - live or ceased

Steps 27 - 35

No live primary employment

Steps 36 - 40

Live employment record held for permitted work - primary or secondary

Steps 41 - 46

Latest primary employment is IB and secondary occupational pension or RACS held

Steps 47 - 53

Update Contact History

Step 54

Initial action

1. Before proceeding check the Contact History screen to view notes and check previous actions

2. Review the Employment Summary screen for CY and determine the current employment position

3. Select the appropriate step number using the above table

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Latest primary employment is IB - live or ceased

4. Review status of primary IB employment

If IB employment is live, go to step 5
If IB employment has ceased, go to step 6

5. Select the drill down button next to the IB employment record

If no IB start date is shown, view P14 Summary screen to establish the year for which a P14 was first received for IB and enter an estimated start date as 05/04/20YY, substituting the tax year end of the first year for which a P14 was received for IB. For example, P14 held for 2005-06, enter start date as 05/04/2006
Select cessation source as user
Insert the date of leaving as the day before the ESA start date as shown on the PB3 and [Save]

6. Select the [Insert] button to create ESA employment

Enter PAYE reference (This content has been withheld because of exemptions in the Freedom of Information Act 2000)
Select employment type as ‘Primary’
Enter the DWP UBO office code in the Works No. field, using the correct format. The second digit should be omitted and a dash should be placed between the first two and last three digits in the format nn-nnn. For example, 92-710
Note: When inserting a works number do not use the ‘#’ symbol anywhere in the Works No field
Enter start date as shown on the PB3
Enter start tax code as the code previously operated by DWP against the IB employment record and [Save]

7. Select the IABD Landing screen for CY and enter form type ‘Other form’

Select the drill down button next to Employment Estimated Earnings
Enter estimated IB to the date of leaving, based on the weekly rate of IB received prior to reassessment
Enter estimated ESA, based on the weekly rate of IB received prior to reassessment for the remaining weeks of the tax year. Where you are unable to calculate the weekly IB, refer to the CY-1 IB P14 details, if held, and form P242. [Save] and [Submit]
Issue a P2 to the customer and a manual P6U to DWP address shown on the PB3. Consider the basis of operation in accordance with PAYE11120
Go to step 54

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Latest primary is occupational pension or RACS and secondary IB is held - live or ceased

8. Before proceeding check the start date shown on the PB3. If the start date is in the future, put to one side, to be worked from the date ESA commences

Review whether P45(IB)(O) has been actioned

9. Select the Employment Summary screen and review whether secondary IB employment is held - live or ceased, then

Select IABD Summary screen for CY
Select the drill down button next to Incapacity benefit
Note whether End date is shown
If IB employment is live and End Date is not shown in IABD, follow steps 10 - 14
If IB employment has ceased and End Date is shown as day before ESA start date, follow step 10 to create the ESA employment, then go to step 15
If IB employment has ceased and End Date is not shown as day before ESA start date, follow step 10 to create the ESA employment, then go to step 20

Create the ESA employment

10. Select the [Insert] button on the Employment Summary screen

Enter the PAYE reference (This content has been withheld because of exemptions in the Freedom of Information Act 2000)
Select employment type as ‘Secondary’
Enter the DWP UBO office code in the Works No. field using the correct format. The second digit should be omitted and a dash should be placed between the first two and last three digits in the format nn-nnn. For example, 92-710
Note: When inserting a works number do not use the ‘#’ symbol anywhere in the Works No field
Enter start date as shown on the PB3
Enter start tax code as the code previously operated by DWP against the IB employment record and [Save]

End date not shown

Cease the IB employment record

11. Select the drill down button next to the IB employment record

If no IB start date is shown, view the P14 Summary screen to establish the year for which a P14 was first received for IB and enter an estimated start date as 05/04/20YY, substituting the tax year end of the first year for which a P14 was received for IB. For example, P14 held for 2005-06, enter start date as 05/04/2006
Select Cessation Source as user
Insert the date of leaving as the day before the ESA start date as shown on form PB3 and [Save]

Calculate and code ESA in CY IABD

12. View Tax Coding, Coding History for CY and note the annual deduction for IB shown in the latest CY primary tax code issued

Calculate the weekly rate if IB using the CY coded figure divided by the number of weeks received
Note: If IB commenced CY, you will need to establish whether the benefit coded is annual or actual. Use 06/04/CY as the start date if known
Calculate the ESA benefit from the start date to the end of the CY tax year, using the IB weekly rate calculated above
Select IABD Landing screen for CY and enter form type ‘Other form’
Select Taxable Social Security Benefit
Select the drill down button next to Employment and Support Allowance
Do not enter a start date
Enter the figure calculated for ESA in the ESA Benefit Amount field
Set the Estimated ESA indicator and [Save]

Calculate and code IB in CY IABD

13. To calculate the apportioned CY IB coding deduction required, subtract the CY ESA deduction calculated as above, from the annual deduction for IB shown in the latest CY primary tax code issued

Use the ‘Incapacity benefit Tool’ to calculate the entry required for IB in CY IABD, to produce the apportioned CY IB shown in the latest CY primary tax code issued
Select the drill down button next to Incapacity Benefit
Enter the end date as the day before ESA commenced
Enter the apportioned figure for IB as calculated above and [Save] and [Submit]
Issue a P2 to the customer and a manual P6U to DWP address shown on the PB3. A P6 should be issued to the primary source where the tax code has changed. Consider the basis of operation in accordance with PAYE11120

Update CY+1 IABD

14. To update the CY+1 IABD details

Select IABD Landing screen for CY+1 and enter form type ‘Other form’
Select Taxable Social Security Benefits
Select the drill down button next to Incapacity Benefit
If figure for IB is held, make a note of the figure and amend to 0.00
If figure for IB is not held, calculate 52 weeks ESA
Note: If annual coding has taken place, include the CY+1 percentage increase amounts on form P242
Select the drill down button next to Employment and Support Allowance
Enter the figure required in the ESA Benefit Amount field
St the estimated ESA Indicator and [Save]
Go to step 54

End date is the day before ESA start date and ESA benefit details not yet entered

15. Where P45(IB)(O) has been received and processed, it is assumed that the IB source amount entered in CY IABD has been adjusted using the ‘Incapacity Benefit Tool’

Before proceeding, you should ensure the CY coding deduction for IB represents the actual IB received. If this is not the case follow steps 11 - 14

Calculate and code ESA in CY IABD

16. View Tax Coding, Coding History and note the deduction for IB shown in the latest CY primary tax code issued

To calculate the CY ESA coding deduction required, subtract the IB coded deduction, from the annual deduction for IB, shown in the latest CY primary tax code issued prior to IB cessation
Select IABD Landing screen for CY and enter ‘Other form’
Select Taxable Social Security Benefits
Select the drill down button next to Employment and Support Allowance
Do not enter a start date
Enter the figure calculated for ESA in the ESA Benefit Amount field
Set the Estimated ESA indicator and [Save] and [Submit]
Issue a P2 to the customer and a manual P6U to DWP address shown on the PB3. A P6 should be issued to the primary source where the tax code has changed. Consider the basis of operation in accordance with PAYE11120
Note: A P2 should not be issued to the customer for the secondary ESA employment record

Update CY+1 IABD

17. To update the CY+1 IABD details

Select IABD Landing screen for CY+1 and enter form type ‘other form’
Enter form type ‘other form’
Select Taxable Social Security Benefits
Select the drill down button next to Incapacity Benefit
If figure for IB is held, make a note of the figure and amend to 0.00
If figure for IB is not held, calculate 52 weeks ESA
Note: If annual coding has taken place, include the CY+1 percentage increase amounts on form P242
Select the drill down button next to Employment and Support Allowance
Enter the figure required in the ESA Benefit Amount field
Set the Estimated ESA Indicator and [Save]
Go to step 54

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Latest primary is occupational pension or RACS or employment and no secondary IB employment is held

18. Select the drill down button next to the primary employment

If the primary employment is occupational pension, go to step 19
If the primary employment is not occupational pension, go to step 22

Primary employment is occupational pension

Create the ESA employment record

19. Select the [Insert] button on the Employment Summary screen

Enter PAYE reference (This content has been withheld because of exemptions in the Freedom of Information Act 2000)
Select employment type as ‘Secondary’
Enter the DWP UBO office code in the ‘Works No’ field, using the correct format. The second digit should be should be omitted, and a dash should be placed between the first two and the last three digits, in the format ‘nn-nnn’, for example 92-710
Note: When inserting a works number do not use the ‘#’ symbol anywhere in the Works No field
Enter start date as shown on the PB3 and [Save]

Calculate and code ESA in CY IABD

20. Select IABD Landing screen for CY and enter form type ‘Other form’

Select Taxable Social Security Benefits
Select the drill down button next to Employment and Support Allowance
Do not enter a start date
Calculate the ESA from the start date shown on the PB3 to 05/04/CY in accordance with PAYE77230 and treat as New claimant
Set the Estimated ESA indicator and [Save] and [Submit]
Issue a P2 to the customer for the primary pension record and a manual P6U with a BR tax code to DWP address shown on the PB3. A P6 should be issued to the primary record where the tax code has changed. Consider the basis of operation in accordance with PAYE11120
Note: A P2 should not be issued to the customer for the secondary ESA employment record

Update CY+1 IABD

21. To update the CY+1 IABD details

Select IABD Landing screen for CY+1 and enter form type ‘Other form’
Select Taxable Social Security Benefits
Select the drill down button next to Employment and Support Allowance
Calculate the ESA from 06/04/CY+1 to 05/04/CY+1 in accordance with PAYE77230
Note: If Annual Coding has taken place, include the CY+1 percentage increase amounts on form P242
Enter the figure required in the ESA Benefit Amount field
Set the Estimated ESA indicator and [Save]
Go to step 54

Primary employment is not occupational pension

22. Review ESA start date shown on the PB3

If ESA start date is after the current primary, go to step 23
If ESA start date is before the current primary, go to step 26

ESA start date is after current primary employment

23. Select the drill down button next to the primary employment in the Employment Summary screen

Select the P Ceased indicator and [Save]

Create the ESA employment record

24. Select the [Insert] button on the Employment Summary screen

Enter PAYE reference (This content has been withheld because of exemptions in the Freedom of Information Act 2000)
Select employment type as ‘Primary’
Enter the DWP UBO office code in the ‘Works No’ field, using the correct format. The second digit should be should be omitted, and a dash should be placed between the first 2 and the last 3 digits, in the format ‘nn-nnn’, for example 92-710
Note: When inserting a works number do not use the ‘#’ symbol anywhere in the Works No field
Enter start date as shown on the PB3 and [Save]

Calculate and code ESA in CY

25. Select IABD Landing screen for CY and enter form type ‘other form’

Select the drill down button next to Employment Estimated Earnings
Calculate the ESA from the start date shown on the PB3 to 05/04/CY in accordance with PAYE77230
Set the Estimated ESA indicator and [Save] and [Submit]
Issue a P2 to the customer and a manual P6U to DWP address shown on the PB3. Consider the basis of operation in accordance with PAYE11120
Go to step 54

ESA start date is before current primary employment

Create the ESA employment record

26. Select the [Insert] button on the Employment Summary screen

Enter PAYE reference (This content has been withheld because of exemptions in the Freedom of Information Act 2000)
Select employment type as ‘Primary’
Enter the DWP UBO office code in the ‘Works No’ field, using the correct format. The second digit should be should be omitted, and a dash should be placed between the first and the last three digits, in the format ‘nn-nnn’, for example 92-710
Note: When inserting a works number do not use the ‘#’ symbol anywhere in the Works No field
Enter start date as shown on the PB3
Set the P Ceased indicator and [Save]
Go to step 54

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Latest primary is employment and secondary IB employment is held - live or ceased

27. Select the Employment Summary screen and review whether secondary IB employment is held, live or ceased

If IB employment is live, see step 28 onwards
If IB employment has ceased, see step 29 onwards

Cease the IB employment record

28. Select the drill down button next to the IB employment record

If no IB start date is shown, view ‘P14 Summary’ to establish the year for which a P14 was first received for IB and enter an estimated start date as 05/04/20YY, substituting the tax year end of the first year for which a P14 was received for IB. For example, P14 held for 2005-06, enter start date as 05/04/2006
Select Cessation Source as user
Insert the date of leaving as the day before the ESA start date as shown on the PB3 and [Save]

29.

Review ESA start date shown on PB3

If ESA start date is after the current primary, go to step 30
If ESA start date is before the current primary, go to step 35

ESA start date is after current primary employment

30. Select the drill down button next to the primary employment

Select the P Ceased indicator and [Save]

Create the ESA employment record

31. Select the [Insert] button on the Employment Summary screen

Enter PAYE reference (This content has been withheld because of exemptions in the Freedom of Information Act 2000)
Select employment type as ‘Primary’
Enter the DWP UBO office code in the ‘Works No’ field, using the correct format. The first digit should be should be omitted and a dash should be placed between the first two and the last three digits, in the format ‘nn-nnn’, for example 92-710
Note: When inserting a works number do not use the ‘#’ symbol anywhere in the Works No field
Enter start date as shown on the PB3 and [Save]

Calculate and code ESA in CY

32. Select IABD Landing screen for CY and enter form type ‘Other form’

Select Taxable Social Security Benefits
Select the drill down button next to Incapacity Benefit
If end date not shown or IB details have not been updated follow steps 13 and 14 to calculate the weekly rate (see ‘Example 1’)

33.

Select the drill down button next to Employment Estimated Earnings
Enter estimated pay details for ESA and the employment earnings and [Save] and [Submit]
Issue a P2 to the customer and a manual P6U to DWP address shown on the PB3. Consider the basis of operation in accordance with PAYE11120

Update CY+1 IABD

34. Select IABD LANDING screen for CY+1 and enter form type ‘other form’

Select Taxable Social Security Benefits
Select the drill down button next to Incapacity Benefit
If an amount of IB is shown update to 0.00 and [Save]
Go to step 54

ESA start date is before current primary employment

Create the ESA employment record

35. Select the [Insert] button on the Employment Summary screen

Enter PAYE reference (This content has been withheld because of exemptions in the Freedom of Information Act 2000)
Select employment type as ‘Primary’
Enter the DWP UBO office code in the ‘Works No’ field, using the correct format. The second digit should be should be omitted , and a dash should be placed between the first two and the last three digits, in the format ‘nn-nnn’, for example 92-710
Note: When inserting a works number do not use the ‘#’ symbol anywhere in the Works No field
Enter start date as shown on the PB3
Set the P Ceased indicator and [Save]
Go to step 54

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No live primary employment

36. Review the Employment Summary screen

If a live IB Secondary employment is held, go to step 37
If a ceased IB Secondary employment is held, go to step 38
If no IB Secondary employment has been held, go to step 38 only and then issue P6 / P2, then go to step 54

Cease the IB employment record

37. Select the drill down button next to the IB employment record

If no IB start date is shown, view ‘P14 Summary’ to establish the year for which a P14 was first received for IB and enter an estimated start date as 05/04/20YY, substituting the tax year end of the first year for which a P14 was received for IB. For example, P14 held for 2005-06; enter start date as 05/04/2006
Select cessation source as user
Insert the date of leaving as the day before the ESA start date as shown on the PB3 and [Save]

Create the ESA employment record

38. Select the [Insert] button on the Employment Summary screen

Enter PAYE reference (This content has been withheld because of exemptions in the Freedom of Information Act 2000)
Select employment type as ‘Primary’
Enter the DWP UBO office code in the ‘Works No’ field, using the correct format. The second digit should be should be omitted and a dash should be placed between the first two and the last three digits, in the format ‘nn-nnn’, for example 92-710
Note: When inserting a works number do not use the ‘#’ symbol anywhere in the Works No field
Enter start date as shown on the PB3
Enter start tax code as the code previously operated by DWP against the IB employment record, if held, and [Save]

Calculate and code ESA in CY

39.

Select IABD Landing screen for CY and enter form type ‘Other form’
Select Taxable Social Security Benefits
Select the drill down button next to Incapacity Benefit
If End date is not shown enter the end date as the day before the ESA start date as shown on the PB3
Enter IB as 0.00 and [Save]
Select the drill down button next to Employment Estimated Earnings
Enter estimated ESA including IB details to cessation. Where you are unable to calculate the previous IB, refer to the CY-1 IB P14 details if held, and form P242. [Save] and [Submit]
Issue a P2 to the customer and a manual P6U to DWP address shown on the PB3. Consider the basis of operation in accordance with PAYE11120

Update CY+1 IABD

40. Select IABD Landing screen for CY+1 and enter form type ‘Other form’

Select Taxable Social Security Benefits
Select the drill down button next to Incapacity Benefit
If an amount of IB is shown update to 0.00 and [Save]
Go to step 54

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Live employment record held for permitted work - primary or secondary

Where you are able to confirm that the customer is undertaking permitted work, for example by recorded receipt of form PW10 in CONTACT HISTORY, follow the steps below

41. Review the Employment Summary screen

If the latest primary employment is the permitted work, and secondary IB employment is held, live or ceased, go to steps 42 - 46
If the latest primary employment record is IB - live or ceased, follow steps 4 - 7, then review the tax codes in operation at each source
If the latest primary employment record is occupational pension or RACS, follow steps 8 - 17, or 18 - 21, as appropriate, depending on whether IB employment is held, then review the tax codes in operation at each source

42. Select the drill down button next to the primary permitted work employment in the Employment Summary screen

Select Employment Type and amend to Secondary using the drop down option and [Save]

Create the ESA employment record

43. Select the [Insert] button on the EMPLOYMENT SUMMARY screen

Enter PAYE reference (This content has been withheld because of exemptions in the Freedom of Information Act 2000)
Select employment type as ‘Primary
Enter the DWP UBO office code in the ‘Works No’ field, using the correct format. The second digit should be should be omitted and a dash should be placed between the first two and the last three digits, in the format ‘nn-nnn’, for example 92-710
Note: When inserting a works number do not use the ‘#’ symbol anywhere in the Works No field
Enter start date as shown on the PB3
Enter start tax code as the code previously operated by DWP against the IB employment record and [Save]

Cease the IB employment record

44. Select the drill down button next to the IB employment record

If no IB start date is shown, view ‘P14 Summary’ to establish the year for which a P14 was first received for IB and enter an estimated start date as 05/04/20YY, substituting the tax year end of the first year for which a P14 was received for IB. For example, P14 held for 2005-06, enter start date as 05/04/2006
Select cessation source as user
Insert the date of leaving as the day before the ESA start date as shown on the PB3 and [Save]

Calculate and code ESA in CY

45. View IABD Summary for CY and calculate the weekly rate of IB received

Calculate the ESA benefit using the IB weekly rate calculated above
Select IABD Landing screen for CY and enter form type ‘other form’
Select Taxable Social Security Benefits
Select the drill down button next to Incapacity Benefit
If end date is not shown, enter the end date as the day before the ESA start date as shown on the PB3
If IB has not been apportioned to the end date, use the ‘Incapacity Benefit Tool’ to calculate the entry required for IB to produce the apportioned CY IB coding deduction and [Save]
Select the drill down button next to Employment Estimated Earnings
Enter estimated ESA, based on the weekly rate of IB received prior to reassessment for the remaining weeks of the tax year and [Save] and [Submit]
Issue a P2 to the customer and a manual P6U to DWP address shown on the PB3. Review the tax code in operation against the permitted work employment source. A revised tax code will be required. Consider the basis of operation in accordance with PAYE11120

Update CY+1 IABD

46. Select IABD Landing screen for CY+1 and enter form type ‘other form’

Select Taxable Social Security Benefits
Select the drill down button next to Incapacity Benefit
If an amount of IB is shown update to 0.00 and [Save]
Go to step 54

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Latest primary employment is IB and secondary occupational pension or RACS held

47. Before proceeding check the start date shown on the PB3. If the start date is in the future, put to one side, to be worked from the date the ESA commences

48. Review status of primary IB employment. Select the Employment Summary screen and review whether the primary IB employment

If IB employment is live, go to step 49
If IB employment has ceased, go to step 50

Cease the IB employment record

49. Select the drill down button next to the IB employment record

If no IB start date is shown, view ‘P14 Summary’ to establish the year for which a P14 was first received for IB and enter an estimated start date as 05/04/20YY, substituting the tax year end of the first year for which a P14 was received for IB. For example, P14 held for 2005-06; enter start date as 05/04/2006
Select cessation source as user
Insert the date of leaving as the day before the ESA start date as shown on the PB3 and [Save]

50. Select the drill down button next to the pension employment record in the Employment Summary screen

Select Employment Type and amend to ‘Primary’ using the drop down option and [Save]

Create the ESA employment record

51. Select the [Insert] button on the Employment Summary screen

Enter PAYE reference (This content has been withheld because of exemptions in the Freedom of Information Act 2000)
Select employment type as ‘Secondary’
Enter the DWP UBO office code in the ‘Works No’ field, using the correct format. The second digit should be should be omitted, and a dash should be placed between the first two and the last three digits, in the format ‘nn-nnn’, for example 92-710
Note: When inserting a works number do not use the ‘#’ symbol anywhere in the Works No field
Enter start date as shown on the PB3
Enter start tax code as the code previously operated by DWP against the IB Employment record and [Save]

Calculate and code ESA in CY

52. View IABD Summary for CY and calculate the weekly rate of IB

Calculate the ESA benefit using the IB weekly rate calculated above
Select IABD Landing screen for CY and enter form type ‘Other form’
Select Taxable Social Security Benefits
Select the drill down button next to Incapacity Benefit
If end date is not shown, enter the end date as the day before the ESA start date as shown on the PB3
If IB has not been apportioned to the end date, use the ‘Incapacity Benefit Tool’ to calculate the entry required for IB, to produce the apportioned CY IB coding deduction and [Save]
Select the drill down button next to Employment and Support Allowance
Do not enter a start date
Calculate estimated ESA, based on the weekly rate of IB received prior to reassessment for the remaining weeks of the tax year and enter the figure calculated in the ESA Benefit Amount field
Set the Estimated ESA indicator and [Save] and [Submit]
Issue a P2 to the customer for the primary pension record and a manual P6U with a BR tax code to DWP address shown on the PB3. A P6 should be issued to the primary pension record. Consider the basis of operation in accordance with PAYE11120
Note: A P2 should not be issued to the customer for the secondary ESA employment record

53. Select IABD Landing screen for CY+1 and enter form type ‘Other form’

Select Taxable Social Security Benefits
Select the drill down button next to Incapacity Benefit
If an amount of IB is shown update to 0.00 and [Save]
Go to step 54

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Update Contact History

54. When Individuals record has been updated

Update Contact History with actions taken
Scrap the PB3