From 27 October 2008 Employment and Support Allowance (see EIM76185) replaced Incapacity Benefit and Income Support paid on incapacity grounds for anyone starting a claim. However, existing recipients of Incapacity Benefit or Income Support will initially continue to receive their existing benefits, so long as they continue to satisfy the entitlement conditions.
Incapacity benefit (IB) is a social security benefit payable to those who are incapable of work because of illness or disability. IB is taxable except:
As they know the details of the claim, the DWP is responsible for determining whether IB is taxable and notifying the Revenue when a person starts to receive taxable benefit. If there is any doubt whether IB is taxable, the person receiving the IB should be asked to seek clarification from the DWP.
For the first 28 weeks of incapacity, benefit is payable at a
short term lower rate. Thereafter it is paid at a short term higher
rate for another 24 weeks. The recipient then moves on to long term
benefit paid at a higher rate still. These basic rates may be
increased in certain circumstances, for instance the short term
higher rate is increased in the case of the terminally ill.
Sometimes taxable Statutory Sick Pay (SSP) is paid by an employer in the first 28 weeks of incapacity (see EIM76350). The days for which SSP is payable count as part of the first 28 weeks. The recipient will then move on to the short term higher rate even though they may not have had short term IB at the lower rate for the first 28 weeks.
Child dependency additions are not taxable. Additions for an
adult dependent are taxable if the benefit itself is taxable.
Age related additions to long term IB are payable to individuals aged under 45 years old. These additions are taxable.
With regard to the relationship between IB and jobseeker's allowance see EIM76225.