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Thread: Am I Contribution or Income Related ESA for 16k Saving threshold.

  1. #1

    Question Am I Contribution or Income Related ESA for 16k Saving threshold.

    Hi everyone,

    Hope someone can help with ESA and amount of savings / investments you can hold.

    As I have no savings and unable to work, my dad is suggesting to open an ISA and invest 20k for my future needs.

    I have been on ESA (support group) since Nov 2015.

    My recent annual statement (Feb 2021) read as follows:

    ---------------------------------------------------------------------------------------------------------------------------
    "The payment of Employment and Support Allowance is based on your National Contribution records and any additional amount the law says you need to live on.

    Living Expenses £74.70
    Extra money because of the Disability Income Guarantee £17.20
    Extra money because you are in the Support Group £39.40
    Which give a total income-related amount £131.30
    No income will be taken off your Employment and support Allowance
    Your income-related amount is £131.30 less total income of £0.00
    So your income-related entitlement is £131.30
    ---------------------------------------------------------------------------------------------------------------------------

    From the above, I believe I get Contribution Based ESA with an Income Related entitlement of £17.20 (top-up).

    If correct, I am right in saying that, if I have more than 6k of savings, then ONLY the Income Related entitlement of £17.20 will be affected.

    Or, I am wrong and the above is a Income Related ESA and as such any savings over 6K will affect my ESA and loose ESA totally if over 16k.

    Thank you for input in advance.

  2. #2
    Senior Member nukecad's Avatar
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    It's difficult to tell from those confusing letters.

    Your are correct that at least part of your ESA is Income Related, the Enhanced Disability Premium (Disability Income Guarantee) tells you that.

    But whether the rest of your ESA (Personal Allowance/Living Expenses and Support Group component) is Income Related or Contribution Based is harder to work out.

    One way is:

    If your ESA claim started as Contribution Based (to simplify that if you had been working and paying NI in the two/three years before you first claimed ESA) then it will be Contribution Based as long as you are in Support Group.
    There are other ways it could be CB but from what you say I don't think they apply.

    If it started as Income Related (you hadn't been working or hadn't paid enough NI ) then it will be Income Related.

    There is a sure way to find out:
    Ring the DWP (or write to them if you are not in a hurry, it can take up to 45 mins currently for them to answer the phone) and ask them for an ESA124 which tells you exactly how your ESA is worked out and if it's all IR or part CB and part IR - because CB and IR are listed in different columns.
    You can download/see a blank example by clicking this: ESA124 example

    As you say CB ESA is not affected by any income (except personal pensions) or any savings/capital.
    IR ESA will be affected by savings/capital over £6,000 and reduced or stopped depending on how much savings/capital there is.

    Having said all that I'm not sure just how ISA's count for ESA, it may depend on just what kind of ISA it is? (There are different ones).

    Your dad may be better looking at putting the money into a trust fund for you rather than an ISA, he should talk to a financial advisor who is familiar with benefit laws.
    The difference with a trust fund is that you don't have direct control over how the money in the trust can be spent, one or more 'trustees' decide if you can spend the money for things. That's so that the beneficiary of the trust doesn't waste it.
    Because you don't have direct control of how the money can be spent then trust funds do not count as savings or capital.
    I don't know everything. - But I'm good at searching for, and finding, stuff.

    Migration from ESA to Universal Credit- Click here for information.

  3. #3
    Thank you for the detailed reply above @nukecad.

    I started receiving ESA in Aug. 2015 and my NI contributions are as follows:
    2015 - 2015 32 weeks
    2013 - 2014 None
    2012 - 2013 21 weeks
    2011 - 2012 2 weeks

    The first letter dated 18th November 2015 confirming ESA stated:-

    "I am please to to tell you we can pay Employment and Support Allowance from 17th August 2015

    You will get £57.90 a week.

    We have used the tax years ending 5th April 2013 and 5th April 204 to assess your claim.

    From 4th November 2015 your Employment and Support Allowance will be £73.10 a week

    This is because of an age change"


    The next letter dated 9th March 2016 then stated:-


    "The payment of Employment and Support Allowance is based on your National Contribution records and any additional amount the law says you need to live on.

    Living Expenses £73.10
    Extra money because of the Disability Income Guarantee £15.75
    Extra money because you are in the Support Group £36.20
    Which give a total income-related amount £125.05
    No income will be taken off your Employment and support Allowance
    Your income-related amount is £131.30 less total income of £0.00
    So your income-related entitlement is £125.05"


    I am not sure if the above information in enough to highlight if its Contribution or Income Related ESA.

    Thank you again.

  4. #4
    Senior Member nukecad's Avatar
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    Sorry, as you suspect there is not enough there to be absolutely sure, other than at least part of it is Income Related.

    The contribution conditions for claiming CB ESA are tricky and not easy to work out.
    They say that:
    In the last two complete tax years before the start of the benefit year when you claim you must have paid 26 full NI payments, plus:
    In both of those two years you have to have paid or been cedited with contributions to the value of 50x the lower earnings limit.
    https://www.entitledto.co.uk/help/em...ribution-based

    The tax year and the benefit year don't start at the same time, so if you claimed in 2015 the last two complete tax years before the start of the 2015 benefit years would be 2012/2013 and 2013/2014.
    (Because the 2014/2015 tax year wasn't complete when the 2015 benefit year started).

    So it doesn't look that you had made sufficient paid contributions in 2012/2013 to qualify for CB ESA.

    However that condition for 26 paid contrubitions can be waived in certain circumstances, see the link.
    So it is still possible that you may have been awarded CB ESA desite not having enough paid contributions.

    (and its always possible that the DWP used the wrong two years, so they said 32 weeks had been paid - it's been known before for them to make that mistake).

    As said the only way that you can really be sure is to ask the DWP for an ESA124.
    I don't know everything. - But I'm good at searching for, and finding, stuff.

    Migration from ESA to Universal Credit- Click here for information.

  5. #5
    Thank you so much @nukecad for taking the time out to reply to my posts.

    I shall ring DWP to request an ESA124.

    Thank you again.

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