Employment and Support Allowance (ESA) Guide

What Is Employment and Support Allowance (ESA)?

Employment and Support Allowance (ESA) is an incapacity welfare benefit for UK-based adults who face difficulties working because of long-term illness, disability, or neurodivergence. Run by the Department of Work and Pensions (DWP), it’s a way for individuals to replace their basic income with state benefits when they can’t work due to illness or disability.

In August 2023 almost 10 million people claimed some combination of benefits from the DWP with around 1.6 million of those claiming Employment and Support Allowance (ESA). 

People who can’t work or have limited capability to work can claim a New Style Employment and Support Allowance (ESA). They can do this if they are eligible, or check their eligibility through a Work Capability Assessment (WCA). Different types of ESA will suit different individual circumstances and some people may need to contribute towards an ESA if they’ve already been working. When people are unable to work or have limitations to their working lives because of complex health problems like Bipolar Disorder, OCD, acquired brain injury, or PTSD–which affects over 2 million people–ESA can help them.  

Is ESA Taxable?

Whether the ESA is taxable or not depends on the type of ESA. WCA assessments for ESA will factor in someone’s National Insurance contributions. And the ‘‘New Style” ESA arrived in 2013 for anyone making a first-time claim. New Style ESA replaces the traditional contribution-based ESA, which some people will still receive.  

So, whether an ESA is or isn’t taxable depends on the type of ESA. Those who contribute towards their New Style ESA will be taxed. But those on an income-based ESA, via Universal Credit, don’t need to pay any tax towards it. 

Types of ESA

To clarify the specifics around the tax implications of ESA, let’s summarise the history of ESA and the different types:

• Two types of ESA were active between 2008 and 2013 – Contribution-Based ESA and Income-Based ESA. 
• In 2013, Income-Based ESA–which was not taxable–became Universal Credit. Then, the New Style ESA replaced the Contribution-Based ESA which was taxable.
• Benefits received through Universal Credit payments are not taxable.  
• The New Style ESA is taxable and chargeable as social security income.  

People on ESA who are still working but for less than 16 hours a week are also entitled to support from Access to Work. For instance, someone with visual impairments may still need assistive technology like screen readers to support them during reduced hours. Applicants should check the rules about Access to Work and ESA before applying.  

Who Is Eligible for ESA?

According to the government’s latest advice, anyone under the State Pension age who has a disability or health condition that affects how much they work can apply for the New Style Employment and Support Allowance (ESA). 

Eligible individuals also need to have:

• Engaged in work in some capacity as an employee
• Paid National Insurance contributions over the previous 3 years

Some people may be able to receive Universal Credit and a New Style ESA at the same time. People who receive both should find their UC payments reduce by the amount of New Style ESA they receive. In effect, this would leave them with the same amount but from different funding pots.

New Style ESA is a more regular payment than Universal Credit. It includes National Insurance credits towards a State Pension or other benefits. Individuals can claim Universal Credit if they’re on a low income or they need help to pay for living costs. They must be under the State Pension age, over 18, and have 16,000 or less in savings and investments.

How to Claim ESA?

Eligible people can apply for ESA online. When they do, they’ll need the following information: 

• National Insurance number
• Bank or building society account number and sort code 
• Doctor’s name and contact details
• A fit note or sick note if unable to work for longer than 7 days in a row because of a health condition
• Details around income, if working
• The end date of Statutory Sick Pay (SSP), if applicable. 

Individuals can apply for New Style ESA up to 3 months before any Statutory Sick Pay ends. At present, it’s not possible to receive New Style ESA if someone is also getting Statutory Sick Pay (SSP). 

Successful applicants will either receive a status of Limited Capability for Work-Related activity (LCWRA) or Limited Capability for Work (LCW) and go into one of two groups:

• A work-related activity group: For people who can’t work now but may want to prepare to do so in the future. 
• A support group: Individuals in this group have severe limitations on what they can do and won’t need to prepare to work in the future.

How Much ESA Will I Get if I Receive PIP?

If you’re receiving PIP, it won’t impact the amount of ESA you get. The ESA payments you’re entitled to depend on which stage of the assessment you’re at, how old you are, and which group you’re placed into after your Work Capability Assessment. Depending on your circumstances and the outcome of your assessment, you may receive up to £95.55 a week (or £75.65 if under 25), or up to £145.90 a week if you’re placed in the Support Group.

Did you know? If you’re receiving income-related ESA, getting PIP may mean you qualify for extra disability premiums. This is decided based upon factors like which part of PIP you receive, your ESA award, and your living circumstances. You can find out more info on the government’s Disability Premiums info page.

How Long Does ESA Support Group Last?

The time limit for receiving Employment and Support Allowance (ESA) depends on which group individuals go into. There is no specific time limit for becoming a member of the ESA support group. Once in the group, individuals cannot make new claims for income-related ESA benefits. But they will continue to receive payments until the end of any current claim. 

In the work-related activity group, New Style ESA and contribution-based ESA support lasts for 365 days. All beneficiaries must report any changes in their circumstances to the DWP. They may also need to send regular fit notes. 

While on ESA, preparing for eventual work is encouraged – for example, practising with assistive tools like a note-taking app to capture information or follow online courses can help build confidence and skills for a return to work when ready.

What Is the Difference Between Income-Related ESA and Contribution-Based ESA?

To be eligible for ESA support, an individual must be over 16 and under the State Pension age. However, there are differences in eligibility between an income-related ESA through Universal Credit and the contribution-based ‘New Style’ ESA. 

Income-Related ESA Through Universal Credit

This type of ESA is means-tested. Assessors will review someone’s income and level of capital to determine their ESA level of support. They will also factor in an applicant’s partner’s income, such as a spouse. This type is not taxable.

Contribution-Based, New Style ESA

New Style ESA isn’t means-tested. Assessors will review National Insurance contributions and each person’s individual needs to determine eligibility. New Style ESAs are taxable and the amount of tax someone has to pay depends on whether they receive other income such as occupational pensions. 

FAQs

What is the ESA Benefit?

ESA (Employment and Support Allowance) is a government benefit for adults who can’t work, or can only work in a limited way, because of a long-term illness, disability, or neurodivergence. It’s run by the DWP and comes as either New Style ESA or income-related ESA via Universal Credit.

What is Incapacity Benefit?

Incapacity Benefit was a UK welfare benefit for people unable to work due to illness or disability, paid from 1995 until it stopped taking new claims in 2008. It was replaced by ESA, which took over all new claims from 27 October 2008; existing claimants were individually reassessed and migrated across between 2010 and 2014.

Is ESA means-tested?

New Style ESA isn’t; it’s based on National Insurance contributions, not income or savings. Income-related ESA, via Universal Credit, is means-tested.

What is New Style ESA?

The contribution-based version of ESA. It replaced the old contribution-based ESA in 2013 and is based on National Insurance contributions rather than income or savings.

How much is New Style ESA?

For 2026/27, it’s £75.65 a week for under-25s and £95.55 for those 25 and over during the 13-week assessment phase. After assessment, the work-related activity group stays on £95.55 a week, and the support group gets £145.90 a week. Check gov.uk for current rates, as these change every April.