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Elly Rewcastle

Employment and Support Allowance: What is the difference between the two types and who qualifies?

Benefits can be a minefield of information and jargon that can be very overwhelming. Here, we’re breaking down the difference between contribution-based and income-based employment and support allowance (ESA).

For people with disabilities and health conditions, sometimes it’s not possible to work full-time or even work at all. If this is the case, the government’s ESA can help with the cost of living or support you in getting back into work.

However, as with many benefits, it can be difficult to know whether or not you are entitled to the payment and there’s a lot of information to digest. Here, we’ve broken it down to help people to understand.

Read more: Cost of living payments: When to expect the next instalment of DWP’s £900 benefit

What is Employment and Support Allowance?

Employment and Support Allowance, or ESA, is a benefit from the Government, for those who cannot work or whose ability to work is limited due to disability or a health condition. It can provide money to help with living costs and personalised support to help people to get back into work.

What are the different types of ESA?

There are two types of ESA, contribution-based and income-based. The type of benefit that you receive will depend on when you first made a claim and where in the benefits timeline it falls as the introduction of Universal Credit changed such applications.

New-style ESA

New-style ESA is not means-tested. This means whether you can get it and how much you are entitled to are not affected by your income, savings or investments.

If you are on a low income or need help with living costs, you may be able to claim Universal Credit at the same time as the new-style ESA.

Contribution-based ESA

This is the original form of ESA, which was replaced by Universal Credit, and only those who already claim it may continue to do so. If you are claiming this benefit, however, you may be able to add income-based ESA.

Income-related ESA

You cannot make a new claim for income-related ESA, but you might be able to add it to contribution ESA if you already get this, and you need means-tested support.

Income-related ESA is means-tested, which means that your income, savings and investments must be below a certain level to get this benefit.

How much you get depends on the amount of income, savings and investments you have. Income-related ESA is being replaced by Universal Credit.

Who is eligible for new-style ESA?

You can apply for new-style ESA if the following applies:

  • You’re aged 16 or over, and under State Pension age

  • You have an illness or disability that affects how much you can work

  • You have worked as an employee or have been self-employed

  • You have met the National Insurance conditions

  • You are not entitled to Statutory Sick Pay or Maternity Pay

  • You are not entitled to Jobseeker’s Allowance or Income Support

Can I apply for new-style ESA if I’m working?

The rules for ESA say that you can be employed, self-employed or a student but you must be doing “permitted” work. This means that you cannot earn more than £152 per week and you must be working less than 16 hours a week to be able to claim.

Will I need an assessment to claim?

You will need a work capability assessment to determine whether you are eligible for ESA. The assessment looks at different activities that relate to your physical and mental health and you're given points depending on how much difficulty you have performing the different activities.

The WCA is made up of two stages: the limited capability for work assessment, and the limited capability for work-related activity assessment. If you're found to have limited capability for work only, you will be entitled to ESA and placed in the work-related activity group. If you're found to have both limited capabilities for work and for work-related activity, you will be entitled to ESA and placed in the support group.

Work-related activity group

If you're placed in the work-related activity group, your ESA claim will be limited to 12 months. You will be expected to take part in work-focused interviews and undertake work-related activities.

Support group

If you're placed in the support group, you will receive the support component on top of the basic rate of ESA. Your award will not be time-limited, and you will not have any work-related requirements.

How much is ESA?

While your claim is being assessed, for the first 13 weeks you will receive the assessment rate:

  • up to £61.05 a week if you're aged under 25

  • up to £77.00 a week if you're aged 25 or over.

After the assessment period, and you are placed in one of the two groups above, you’ll receive:

  • up to £77.00 a week if you're in the work-related activity group

  • up to £117.60 a week if you're in the support group.

ESA is paid once every two weeks and funds are deposited directly into your bank account. You’ll have to provide these details during your initial claim.

Will I get the cost of living payment?

If you are on new-style, or contribution-based ESA then you will not receive the Cost of Living payment. Millions of people will be affected by this decision, which was made because the benefit is not means-tested.

The £900 cost of living payment is designed to help low-income families with surging prices. As contribution-based ESA does not take your income into account, there is no way to determine whether a claimant falls into the low-income category.

However, those who claim Universal Credit, as well as ESA, may be eligible to receive the payments. If this is the case, the cost of living payments will be paid into the same bank account for your other benefits.

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