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Permitted Work and Net Pay
Just a quick query about permitted work and pension contributions.
My client has been offered a job working 16 hours (they will of course need to work less than this) with wages of £9 phr. I just wanted to make sure I was reading the regs correctly and that the DWP will use only 50% of any pension contributions when assessing net wages and eligibility for permitted work.
http://www.legislation.gov.uk/uksi/2008/794/pdfs/uksi_20080794_en.pdf
Calculation of net earnings of employed earners
96.—(1) For the purposes of regulation 91 (calculation of earnings derived from employed
earner’s employment and income other than earnings) the earnings of a claimant derived from
employment as an employed earner to be taken into account, subject to paragraph (2), are the
claimant’s net earnings.
(2) There is to be disregarded from a claimant’s net earnings, any sum, where applicable,
specified in paragraphs 1 to 12 of Schedule 7 (sums to be disregarded in the calculation of
earnings).
(3) For the purposes of paragraph (1) net earnings are to be calculated by taking into account the
gross earnings of the claimant from that employment less—
(a) any amount deducted from those earnings by way of—
(i) income tax;
(ii) primary Class 1 contributions under section 6(1)(a) of the Contributions and Benefits
Act(c);
(b) one-half of any sum paid by the claimant in respect of a pay period by way of a
contribution towards an occupational or personal pension scheme.
I read this the same way.
UC is more generous in this regard as deductions for pension contributions are allowed in full when calculating earnings to be taken into account.