Incapacity Benefits

Until recently, if illness or disability caused you to be unable to work, you would apply for an Incapacity Benefit (IB). But this system is being phased out, having been replaced by provisions in the Employment and Support Allowance (ESA) system. No new IB claims have been accepted since 31 January 2011.

If you already claim ESA, you won't be affected by this change, but if you currently receive an Incapacity Benefit, Income Support due to illness or disability, or a Severe Disablement Allowance - your claim will automatically be reviewed for inclusion in the ESA programme. You may need to be patient, because this review of claims and transfer of beneficiaries to the ESA is a large bureaucratic project which began in October 2010 and is only expected to be completed during 2014.

Until your claim is reviewed, you'll continue to get your current benefit - as long as you still meet the appropriate criteria. You'll be informed in writing by Jobcentre Plus when your benefit claim is going to be reviewed. There'll be no change if you'll reach State Pension age by 6 April 2014, or if you're already over State Pension age and receive a Severe Disablement Allowance.

Amounts due to beneficiaries

Under this system, each phase had its own pay rate. If you're receiving payments from this scheme, you'll be receiving the Long Term IB rate, which pays beneficiaries £99.15 per week. If you were under the age of 45 when you became disabled or too ill to work, you may also be getting an 'age addition' above the standard rate.

You should be aware that as long as you're part of this programme, you may also be able to obtain an extra benefit for your partner, civil partner, or your children's care worker.

If you receive a pension, this may affect your Incapacity Benefit. If your gross pension income is over £85 per week, the benefit amount will be reduced by half of the excess. The excess is the difference between £85 and your pension income, so if you receive a pension of £100, the excess would work out at £15, and your benefit would be reduced by half of that; by £7.50.

This rule doesn't apply if you started receiving your IB before 6 April 2001, or if your claim happens under the linking rules for an Incapacity Benefit which links it back to date before 6 April 2001. The rule also doesn't apply to you if you get the highest rate of the care component of a Disability Living Allowance.

If you're responsible for the care of one or more children, you may qualify for a Child Tax Credit. Your local Jobcentre Plus will be able to clarify your position.

'Permitted Work' – earning whilst claiming IB

As an IB beneficiary, you should still be allowed to do certain types of work, and receive payment for doing so. This is called ' permitted work” and is allowed to happen only within strict limits. You need to be aware that earning a wage while receiving an IB could affect other income-related benefits that you receive, such as Income Support, Housing Benefits and Council Tax Benefits.

Some of the Permitted Work rules mean that you can work if you earn £20 or less during a week for whatever work you do, or - if averaged out over a 52 week year - you work less than 16 hours per week for a weekly income of £97.50 or less. For as long as your illness or disability is considered so severe that you're meeting the threshold of incapacity without having a medical assessment, you can work for income if you work for less than 16 hours a week, on average, and earn up to £97.50 a week.

Finally, you are allowed to do Supported Permitted Work and earn up to £97.50 a week for as long as you are receiving Incapacity Benefit. Supported Permitted Work is defined as work that is supervised by a person who is employed by a public or local council, or for a voluntary organisation, and specifically tasked with arranging work for disabled people. Most often, this kind of work is done in the community, or in a sheltered workshop. It can also include work that's done as part of a hospital treatment programme.

To ensure that taking work on doesn't needlessly affect your benefits, you need to contact your local Jobcentre Plus office as soon as you agree to doing any work – including volunteer work. You are also obliged to inform them if you're undergoing training and receiving a training allowance.