If you’ve had to stop working or work fewer hours because of a disability or illness, you may be able to claim disability benefits. But will HMRC want a slice of it, or is this income non-taxable?
First things first, let’s have a look at what disability and sickness benefits you can claim in the UK. This depends on your circumstances. Your options include:
You may also qualify for other benefits. But, before we have a look at these, let’s go over the disability and sickness benefits we’ve listed above in a bit more detail.
If you’re unable to work, Statutory Sick Pay is your first port of call. This is paid for by your employer and forms part of your taxable income. In other words, you’ll get it the same way and with the same frequency as your salary. And income tax at the usual rates will apply.To qualify for Statutory Sick Pay, you must:
Statutory Sick Pay is £92.05 a week for up to 28 weeks. So, the maximum you can claim in a year is £2577.40. Once you’ve used up your 28 weeks, you won’t be able to claim any more Statutory Sick Pay until the following year.
If you’ve run out of Statutory Sick Pay or can’t claim it, for example, because you’re self-employed, you may be able to claim Employment and Support Allowance, also known as ESA. There are three types: contribution-based ESA, income-related ESA, and ‘new style’ ESA if you’re entitled to claim Universal Credit.
As the name suggests, you can only claim contribution-based ESA if you’ve paid enough National Insurance. There are two conditions you must meet:
You can claim income-related ESA if you earn less than £116 a week and didn’t pay enough National Insurance (or get enough National Insurance credits) to qualify for contribution-based ESA.You’ll also have to be means-tested, and you might not be allowed to claim if:
To get ESA, you’ll have to be assessed. You can get:
However, you’ll only get these amounts for the first 13 weeks after you claim. Once your 13 weeks are up, you’ll be placed either in the support group or the work-related activity group.If you’re in the support group, you can get up to £110.75 a week. Depending on how badly your condition affects you, you might also qualify for a £16.40 a week enhanced disability premium or £64.30 a week severe disability premium.If you’re in the work-related activity group, you can get up to £73.10 a week (or £114.85 if you’re a couple).Income-related ESA isn’t taxable. But contribution-based ESA is.
You may be able to claim Personal Independence Payment, Disability Living Allowance or Attendance Allowance either separately or in addition to ESA. All three of these benefits are non-taxable.Let’s have a look at each in turn.
You can apply for PIP if you:
PIP isn’t means-tested so you can get it even if you have money saved up or you’re still working. That said, a medical professional will assess you and this will affect how much you’ll get. Depending on your condition, you could get between £22.65 and £145.30 a week.
Personal Independence Payment is slowly replacing DLA. That said, for the time being, you can still apply for DLA if:
Like Personal Independence Payment, DLA is tax-free. It has two components: a care component and a mobility component. You might be eligible for only one component or for both.
You’re eligible for the care component if you need help with day-to-day tasks such as washing, getting dressed or using the bathroom and you don’t have anyone to help you. The rate depends on the level of help you need:
You might qualify for the mobility component if you can’t walk, have difficulty walking or can only walk short distances. Like the care component, how much you get depends on the level of help you need:
You can claim Attendance Allowance if you need someone to help look after you. To qualify you must:
Depending on your circumstances, you can get either £57.30 week or £85.60 a week.
Yes. Depending on your situation, you may also qualify for the following benefits:
You might qualify for this benefit if you’re sick or disabled as a result of an accident at work or during an approved employment training scheme course. It’s non-taxable, but how much you’ll get depends on the severity of your condition. You must be assessed at least 14 percent disabled to qualify.
Working tax credits help you top up your earnings if you work but have a low income. They’re non-taxable. You can claim them if you’re disabled, already claim a disability benefit and work at least 16 hours a week.
Child tax credits help you with child-rearing costs if you’re on a low income. The benefit is non-taxable. To qualify, you must have a total household income of £26,000 or less, which goes up to £32,000 or less if you have two children. You can claim up to the 31 August after your child’s 16th birthday or until their 20th birthday if they’re studying.
This table summarises the sickness and disability benefits you can claim in the UK, how much you could get and whether they’re taxable or non-taxable.[table id=37 /]