Frequently Asked Questions

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Employment and Support Allowance (ESA) – contributory or income-related?

Background

Employment and Support Allowance (ESA) was introduced on October 28th 2008 as a replacement both for Incapacity Benefit and also for Income Support for those who claimed because of sickness or disability.

Anyone already in receipt of one of the above benefits on 27/10/2008 continues to receive them until they are “migrated” to ESA (and although it is many years since this change there do still seem to be some people who have not yet been “migrated”).

ESA is awarded in two different ways: Contributory ESA and Income Related ESA.

Contributory ESA is linked to the past payment of National Insurance Contributions in the same way that Incapacity Benefit was, (except for those with limited capacity for work who claim before the age of twenty). It is income in full for DFG means-testing purposes. Contributory ESA is often referred to by the DWP these days as “new-style” ESA – this seems to be because no new claims can now be made for means-tested ESA.

Income Related ESA is a replacement for Income Support paid as a result of incapacity and is therefore a “passporting benefit” for DFG means-testing purposes.

Those conducting the means-test are often confused as to which form of ESA is being awarded by the bizarre letters sent by the DWP.

The following points may be helpful in deciding which form is in payment.

There are various hoops to jump through when claiming ESA. Any claimant enters a 11-week assessment phase where an assessment is made as to work capability. This test is similar to, but stricter than, the test formerly applied to Incapacity Benefit claimants.

Once incapacity for work has been proved a claimant is in “main phase” ESA. Anyone who has a very limited capability will go into the support group whilst those whose capability is less limited will enter the work related activity group.

Those who receive Contributory ESA and who are in the work related group can only receive ESA for a year. After that their entitlement ends.

Those who receive Contributory ESA and who are in the support group can continue to receive ESA until they reach state pension age.

Rates in payment

The basic rate of ESA is £90.50 pw. This will be the rate paid during the assessment phase.

There is an addition of £35.95 pw payable to those in the work related group. However, this was abolished for new claimants from April 2017. Only those who were in receipt of this addition at that date and who continue to satisfy the rules can receive it. However, as noted above, those in this group in receipt of contributory ESA only got ESA for one year. So if a customer receives £126.45 pw (£90.50 + £35.95) we know that this can now only be an award of income-related ESA.

There is an addition of £47.70 pw payable to those in the support group. In income-related ESA, as for DFG means-testing, receipt of this support “component” entitles the customer also to the Enhanced Disability Premium of £20.85 pw. That premium only exists within the means-tested form. It cannot be paid as part of contributory ESA.

So if a customer is in the support group and receives £138.20 pw (£90.50 + £47.70) we know that they are in receipt of contributory ESA.

It also follows that if a customer is in the support group and receives £159.05 pw (£90.50 + £47.70 + £20.85) we know that they are in receipt of income-related ESA.

Working partners

If a customer has a working partner it is almost impossible for them to be receiving income-related ESA. There is a “statute bar” preventing them receiving income-related ESA if their partner works 21 hours per week or more. In practice it is highly unlikely that anyone with a partner in “full-time work”, 16 hours per week for most benefits purposes, would receive the means-tested form, simply because their income would be too high to qualify.

Couples and single people

Contributory ESA is described as a “personal benefit”. This is the justification for not paying dependant’s increases in respect of a partner, which was possible under Incapacity Benefit. Conversely, those claiming income-related ESA can be paid it as a couple. The personal allowance for a couple is £142.25 pw. Any award letter that refers to a couple rate of £142.25 pw actually being in payment to the couple therefore can relate only to an award of income-related ESA.

Disabled young people

Following the introduction of ESA in 2008 disabled young people, in receipt of DLA or PIP, could claim contributory ESA from the age of 16 albeit that they had not met the contribution conditions. They would need to provide a medical certificate from their GP. They could receive ESA even if they were in full-time education. This continued a similar rule which had applied to Incapacity Benefit.

This provision was ended in May 2012. However, young people in this group can still claim Universal Credit in these situations (provided they receive any element of DLA or PIP and can provide a medical certificate). Receipt of UC in this situation excludes receipt of Child Benefit.

So someone in this situation may be passported to a full grant if they are a qualifying young person as their parents receive Child Benefit for them.

Alternatively, if they are receiving UC they will be passported to a full grant as they are in receipt of a passporting benefit.

It is the same end result, in neither case will there be a means-test or any assessed contribution, but for paperwork purposes it may be important to be clear as to which category the young person falls into.

Effect on premiums

The effect on premiums within the DFG calculation is as follows:

Being in “main phase” cESA entitles the customer to a disability premium.

Being in the support group for cESA also entitles the customer to an enhanced disability premium.

Rates

It is therefore possible, in some but not all cases, to determine whether we are dealing with the contributory or means-tested forms of ESA simply from the amount in payment:

2024-2025 Rates used

Amount payable	Situation	Contributory or means-tested?
£159.05*	Single person in support group with enhanced disability premium	Means-tested
£126.45	Single person in work-related group for more than a year	Means-tested
£142.25 (the couple rate)	Couple rate is part of the assessment	Means-tested
£138.20	Single person in support group	Contributory
£240.55**	Single person in support group with enhanced disability premium and severe disability premium	Means-tested

* This could all be means-tested ESA or it could be £138.20 contributory ESA “topped up” by the enhanced disability premium of £20.85. In either case the customer is receiving means-tested ESA.

** This could all be means-tested ESA or it could be £138.20 contributory ESA "topped up" by the enhanced disability premium of £20.85 and the severe disability premium of £81.50. In either case the customer is receiving means-tested ESA.