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HMRC internal manual

PAYE Manual

PAYE operation: employment and support allowance: computer action

Employment and Support Allowance (ESA) data sent through JSAPS will automatically try to trace a PAYE interest on the National Insurance and PAYE Service (NPS) for the ESA claimant.

If no PAYE interest is found, the process will attempt to trace a National Insurance interest. Processing and consequent actions (create employment, maintain employment, coding and reconciliation) are dependant on whether the existing PAYE interest is an employment or an occupational pension.

Where a National Insurance interest but no live primary or live secondary PAYE interest can be found on NPS, a primary employment will be created with the valid employer PAYE reference for ESA (This content has been withheld because of exemptions in the Freedom of Information Act 2000) , and the record will be populated with the relevant information - ESA PAYE Reference, Start Date, Job Title, Benefit Office. The Job Title will be Employment and Support Allowance. The Works Number will be UBO Office code, and the tax code on the P45(3) will be recorded. A new ESA indicator will also be set on the record.

If there is a current primary employment (not an occupational pension / retirement annuity), NPS will flag any current primary employment as ‘Potentially Ceased’ and create a new primary ESA employment, applying the details from the JSAPS platform (ESA PAYE Reference, Start Date, Benefit Office Code).

Note: Where you receive information that an individual continues to receive income from their employment, including sick pay, whilst in receipt of ESA, you should follow the guidance at PAYE77260.

Where no live primary PAYE source exists on the record, NPS will create a new primary employment using the ESA reference and operate the tax code on the P45(3).

Where the live primary record is an occupational pension NPS will create a new secondary employment using the ESA reference. This will allow the ESA P14 details to be posted at the year end.

Where the live primary source is an occupational pension and there is already a live secondary NPS will create a new secondary employment using the ESA reference.

For guidance regarding IB to ESA reassessment, see PAYE77210.