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Is My Disability Income Taxable in the UK?

Andre Spiteri
April 23, 2019
smiling disabled woman working from home sitting on sofa with injured leg propped up|doctor visiting disabled female patient at home|disabled female sitting on sofa with 1 leg elevated and reading report

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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?

What disability benefits can I claim in the UK?

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:

  • Statutory Sick Pay
  • Employment and Support Allowance
  • Personal Independence Payment
  • Disability Living Allowance
  • Attendance Allowance

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.

What is statutory sick pay?

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:

  • Be an employee in full-time or part-time employment. You’re not eligible for Statutory Sick Pay if you’re self-employed. In contrast, you may be eligible if you’re unemployed, but only if you’re getting Jobseeker’s Allowance.
  • Have been sick for at least four days in a row. This includes weekends and bank holidays.
  • Earn an average of at least £116 a week.
  • Let your employer know you’re sick within seven days. Your employer may have a shorter or longer deadline.

How much is statutory sick pay?

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.

I can’t claim statutory sick pay or it’s run out. Now what?

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.

Contribution-based ESA

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 paid Class 1 or Class 2 National Insurance for at least 26 weeks in one of the last two tax years. Remember that the UK tax year runs from April 6 to April 5
  • In the last two tax years, your National Insurance contributions or credits totalled 50 times the lower earnings limit. In 2018/19, the lower earnings limit is £ So, to meet this requirement, your contributions or credits must amount to at least £5,800 a year.

Income-related ESA

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:

  • You or your partner have income or savings amounting to £16,000 or more
  • Your partner works 24 or more hours a week

How much is ESA?

To get ESA, you’ll have to be assessed. You can get:

  • Up to £90 a week if you’re under 25
  • Up to £10 if you’re 25 or over

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.

Other disability benefits: Personal independence payment, disability living allowance and attendance allowance

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.

Personal Independence Payment (PIP)

You can apply for PIP if you:

  • Are aged between 16 and 64
  • Have a condition that makes it difficult for you to get around or go on with daily activities
  • Have had the condition for at least three months and expect it to continue affecting you for at least nine more months
  • Currently reside in England, Scotland or Wales and have lived there for at least two of the last three years

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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.

disabled female sitting on sofa with 1 leg elevated and reading report

Disability Living Allowance (DLA)

Personal Independence Payment is slowly replacing DLA. That said, for the time being, you can still apply for DLA if:

  • You were born before 8 April 1948 and are already claiming it
  • You’re claiming on behalf of a disabled person under 16

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.

The care component

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:

  • £65 a week if you need help only for part of the day or with cooking
  • £30 if you need frequent help, supervision during the day, supervision at night or someone to help you because you’re on dialysis
  • £60 if you need round the clock supervision or you’re terminally ill

The mobility component

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:

  • £65 a week if you need guidance or supervision while you’re outdoors
  • £75 a week if you have a more severe walking difficulty

Attendance allowance

You can claim Attendance Allowance if you need someone to help look after you. To qualify you must:

  • Have a physical or mental disability
  • Need someone to supervise you for your safety
  • Be 65 years old or over
  • Have never claimed Personal Independence Payment or Disability Living Allowance.

Depending on your circumstances, you can get either £57.30  week or £85.60 a week.

Can I claim other benefits while on disability?

Yes. Depending on your situation, you may also qualify for the following benefits:

Disablement benefit

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

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

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.

Sickness and disability benefits table

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 /]

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MileIQ: Mileage Tracker & Log

MileIQ Inc.

GET — On the App Store

View
MileIQPricing
Open MenuClose Menu

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?

What disability benefits can I claim in the UK?

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:

  • Statutory Sick Pay
  • Employment and Support Allowance
  • Personal Independence Payment
  • Disability Living Allowance
  • Attendance Allowance

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.

What is statutory sick pay?

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:

  • Be an employee in full-time or part-time employment. You’re not eligible for Statutory Sick Pay if you’re self-employed. In contrast, you may be eligible if you’re unemployed, but only if you’re getting Jobseeker’s Allowance.
  • Have been sick for at least four days in a row. This includes weekends and bank holidays.
  • Earn an average of at least £116 a week.
  • Let your employer know you’re sick within seven days. Your employer may have a shorter or longer deadline.

How much is statutory sick pay?

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.

I can’t claim statutory sick pay or it’s run out. Now what?

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.

Contribution-based ESA

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 paid Class 1 or Class 2 National Insurance for at least 26 weeks in one of the last two tax years. Remember that the UK tax year runs from April 6 to April 5
  • In the last two tax years, your National Insurance contributions or credits totalled 50 times the lower earnings limit. In 2018/19, the lower earnings limit is £ So, to meet this requirement, your contributions or credits must amount to at least £5,800 a year.

Income-related ESA

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:

  • You or your partner have income or savings amounting to £16,000 or more
  • Your partner works 24 or more hours a week

How much is ESA?

To get ESA, you’ll have to be assessed. You can get:

  • Up to £90 a week if you’re under 25
  • Up to £10 if you’re 25 or over

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.

Other disability benefits: Personal independence payment, disability living allowance and attendance allowance

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.

Personal Independence Payment (PIP)

You can apply for PIP if you:

  • Are aged between 16 and 64
  • Have a condition that makes it difficult for you to get around or go on with daily activities
  • Have had the condition for at least three months and expect it to continue affecting you for at least nine more months
  • Currently reside in England, Scotland or Wales and have lived there for at least two of the last three years

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.

disabled female sitting on sofa with 1 leg elevated and reading report

Disability Living Allowance (DLA)

Personal Independence Payment is slowly replacing DLA. That said, for the time being, you can still apply for DLA if:

  • You were born before 8 April 1948 and are already claiming it
  • You’re claiming on behalf of a disabled person under 16

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.

The care component

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:

  • £65 a week if you need help only for part of the day or with cooking
  • £30 if you need frequent help, supervision during the day, supervision at night or someone to help you because you’re on dialysis
  • £60 if you need round the clock supervision or you’re terminally ill

The mobility component

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:

  • £65 a week if you need guidance or supervision while you’re outdoors
  • £75 a week if you have a more severe walking difficulty

Attendance allowance

You can claim Attendance Allowance if you need someone to help look after you. To qualify you must:

  • Have a physical or mental disability
  • Need someone to supervise you for your safety
  • Be 65 years old or over
  • Have never claimed Personal Independence Payment or Disability Living Allowance.

Depending on your circumstances, you can get either £57.30  week or £85.60 a week.

Can I claim other benefits while on disability?

Yes. Depending on your situation, you may also qualify for the following benefits:

Disablement benefit

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

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

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.

Sickness and disability benefits table

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 /]

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