Calculating ESA

 

The amount of employment and support allowance (ESA) a claimant is entitled to depends upon a number of factors, including whether the claimant is: single or part of a couple; in receipt of certain benefits; entitled to income-related and/or contributory ESA; and/or still in the initial assessment phase. Edward Graham explains how much ESA a claimant may be entitled to.

ESA contains both a contributory and income-related element. Contributory ESA is subject to a national insurance (NI) contribution requirement similar to that for incapacity benefit (IB),1 part 1 Sch 1 WRA 2007 and income-related ESA is subject to a means test similar to that for income support (IS). Claimants can receive either or both elements depending on whether they meet the NI contribution conditions and/or the means test.

ESA claimants will have to go through an assessment phase, which will normally (see below) run from the first day of entitlement until the end of the 13th week of entitlement.2 s24(2) WRA 2007; reg 4 ESA Regs During this phase they will be assessed for limited capability for work, the basic condition of entitlement to ESA. Rates of benefit during this phase are intended to mirror those of jobseeker's allowance.

Contributory ESA 3 s2 WRA 2007; reg 67(2) and Sch 4 Para 1(1) ESA Regswill contain only a basic allowance during the assessment phase, which is paid at a personal rate for the claimant only. There is no couple rate or any dependent or age additions like there is in IB. But where both members of a couple are entitled to contributory ESA they will each get a basic allowance:

Single claimant aged 25 or over: £60.50

Single claimant aged under 25: £47.95

Income-related ESA4 s4 WRA 2007; reg 67(1) and Sch 4 ESA Regsis calculated in a similar way to IS. It has an applicable amount made up of allowances for single claimants and couples, premiums, and eligible housing costs:

Single claimant aged 25 or over: £60.50

Single claimant aged under 25: £47.95

Couple, both aged 18 or over: £94.95

There are differing rates payable to lone parents under 25 and couples where one or more is aged less than 18.5 See reg 69 and Sch 5 ESA Regs for the full amounts.These rules are similar to those for IS.

Income-related ESA includes the following premiums:

	single	couple
pensioner premium	£63.55	£94.90
severe disability premium	£50.35	£100.70
enhance disability premium	£12.60	£18.50
carer premium	£27.50

The qualifying rules for the above premiums and eligible housing costs are fundamentally similar to those for IS. In addition, all those in the support group are automatically entitled to the enhanced disability premium (EDP). The EDP is not paid where a pensioner premium is payable.6 Sch 1 para 3 ESA RegsThe disability premium is not available in ESA. It has in effect been replaced by two components of ESA, the work-related activity component and the support component which are not available during the assessment phase.

While the assessment phase is supposed to last 13 weeks, if a decision has not been made on whether or not the claimant has or can be treated as having limited capability for work (i.e., passed the medical) by the end of the 13 weeks, the assessment phase will not end until that decision is made.7 Reg 4 ESA RegsAny increases in benefit payable during the main phase will be backdated to the end of the 13th week of entitlement. If a decision is made during the 13 weeks, the assessment phase - and the corresponding assessment phase rate - continues until the end of 13 weeks.

Some claimants do have to wait until the end of the assessment phase to receive the relevant ESA component, such as those who are terminally ill who can qualify for the support component from the beginning of their claim.8 Reg 7(1)(a) ESA RegsThose who can link 9 Reg 145 ESA Regstheir ESA claim to a previous claim for ESA will not have to go though that period of the assessment phase they have already been through, and if the assessment phase had ended on their previous claim they will go straight back into the main phase of ESA on their new claim.10 Regs 5 and 7(1)(b) ESA Regs

Once the assessment phase is over, a number of changes are made to the amounts of ESA (both income-related and contributory). Firstly, the lower amounts of the personal allowance paid to single claimants under the age of 25 ends and they become entitled to the rate for those aged 25 or over of £60.50.11 Sch 4 para 1 (1)(a) ESA RegsSecondly, claimants become entitled to either a work-related activity component (though this is also dependent on satisfying the conditionality rules) or a support component, which is payable in both income-related and contributory ESA12 ss2(2)-(3) and 4(2)-(3) WRA 2007- these are added to the basic allowance which was paid during the assessment phase or, in the case of income-related ESA, to the applicable amount which is made up of the basic allowance and any premiums and eligible housing costs.

During the assessment phase, the claimant undergoes the work capability assessment (WCA).Two decisions about the claimant's circumstances are made. The first is whether or not s/he has limited capability for work. This is the basic condition the claimant must satisfy to remain entitled to ESA and progress from the assessment phase to the main phase, and is determined in accordance with the new WCA. The second is whether the claimant also has limited capability for work-related activity. Those who meet this are placed in the support group, while those who do not are placed in the work-related activity group. The amounts of each component are:

Work-related actively component: £24

Support component: £29

There is no couple rate of either component and a claimant can only receive one of the components. Only one member of a couple can be the claimant for income-related ESA, so only one component is payable as part of that award, even if both members of the couple are separately entitled to components as part of their separate contributory ESA award. It should also be noted that the pensioner premium is paid inclusive of any work-related activity or support component - i.e., its amount will be reduced by either £24 or £29.13 Sch 4 Para 11 ESA RegsClaimants who are allocated to the support group also become entitled to the enhanced disability premium.14 Sch 4 Para 7(1)(a) ESA Regs

Contributory ESA is subject to deductions in a similar way to IB.15 ss2(1) and 3 WRA 2007 and regs 72-79 ESA Regs An amount equal to any 'net amount' of a councillor's allowance that exceeds £88.50 is deducted. Deductions are also made for pensions and payments of permanent health insurance. In this case ESA is reduced by half the amount of any payment in excess of £85. Unlike IB, there is no exemption from this rule for those in receipt of the higher rate care component of disability living allowance.

Income-related ESA is subject to a means test similar to that of IS - i.e., capital limits, types of income, notional income etc.16 s4 and Sch 1 para 6 WRA 2007. The detailed rules are contained in the ESA Regs.Claimants are assessed on their own resources and those of their partner if they have one. The definition of a couple is the same as for IS. Once the claimant's applicable amount is determined using the amounts listed above, it is reduced by the amount of her/his income, if any.

ESA claimants are not allowed to work, unless it is work that is exempt or not treated as remunerative work. Certain types of work are exempt,17 Reg 45 ESA Regsand these rules are similar to those for IB and IS on grounds of incapacity for work. However, only those claimants in the support group are allowed to take advantage of the permitted work higher limit (working 16 hours a week and earning less than £88.50) without at least an initial restriction to 52 weeks. Also, unlike for IS, the earnings from any exempt work is not counted as income for either contributory or income-related ESA.18 Sch 7 ESA Regs (But note that they will still be counted as income for housing and council tax benefit.)

Claimants receiving the work-related activity component are subject to conditionality, and it is that element of their ESA which can be sanctioned - i.e., reduced and then withdrawn.

Claimants who fail the assessment of limited capability for work and appeal that decision can continue to be paid ESA, but as the assessment phase rate only, until their appeal is determined by an appeal tribunal.19 Reg 6 ESA Regs

Ben is aged 42 when he claims ESA. He lives with his wife Anne and their 9-year-old daughter. They have had a mortgage since 2002 with eligible housing costs of £90 a week. They get child benefit and child tax credit (CTC). Anne works 12 hours a week and earns £80 a week. Ben has not paid enough NI to get contributory ESA. Ben is assessed as being in the work-related activity group.

Applicable amount = £94.95 (personal allowance for a couple aged 18 or over)

Income to be taken into account = £60 (child benefit and CTC ignored; £20 earnings disregard applies)

Ben's income-related ESA during assessment phase is £94.95 minus £60 = £34.95

Applicable amount = £118.95 (personal allowance of £94.95 for couple both aged 18 or over plus a work-related activity component of £24)

Income to be taken into account (as above) = £60

Ben's income-related ESA during the main phase is £118.95 minus £60 = £58.95.

After 39 weeks of being on ESA, they qualify for help with their housing costs and Ben's applicable amount will increase to include any eligible housing costs.

Note: if Ben was assessed to be in the support group he would get the support component of £29 plus the couple rate of the enhanced disability premium of £18.15.

Jim is 54 when he claims ESA. He lives with his wife Liz who works 35 hours a week and earns £250 a week. He is assessed as being in the work-related activity group.

Basic allowance = £60.50 (there is no couple rate for contributory ESA)

Basic allowance = £60.50

Work-related activity component = £24

Total = £84.50

Jim does not qualify for a top-up of income-related ESA because his wife works full time.

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