Contribution based ESA and income from dividends

Hi C C,
Firstly if you want to move to contribution ESA, you would need to show that you have sufficient NI Contributions paid in - there are 2 conditions:
First contribution condition - in one of the last two complete tax years, you must have paid Class 1 or 2 contributions on relevant earnings at the lower earnings limit for at least 26 weeks. This means you must have worked for at least 26 weeks of the last two complete tax years; and
Second contribution condition - in both of the last two complete tax years, you must have paid or been credited with, Class 1 or 2 contributions to the value of 50 times the lower earnings limit.
The 2 tax years that are relevant are the ones that were completed before the benefit year in which your period of limited capability for work began.

The tax year runs 6 April - 5 April
The benefit year runs from the first Sunday in January
The lower earnings limit for the 2019/20 tax year was £118, for the 2020/21 tax year it was £120 per week

Dividend income won't affect contributions based ESA.
Dividend income, like all income will affect means tested ESA. At £900 per year this equates to about £17 per week.
However, there are several problems here you may wish to consider.
1. Unless you are already on ESA then you will need to claim Universal Credit. You can't start up a new claim for means tested ESA
2. If you haven't been working recently it is difficult to satisfy the conditions for
Contribution based ESA or new style ESA as it is now called. This is a fixed amount, everyone gets the same. It is not as much as means tested ESA or the equivalent under UC. You can only get this for 365 days unless you are very unwell and qualify to get into the Support Group. It doesn't matter if you have a partner who earns. Under means tested ESA/UC partner's earnings will be taken into account.
3. For means tested ESA/UC there us a capital limit. You can have up to £6000, without any deductions, but over £6000 to an absolute maximum of £16000 your benefit will be reduced by £1 for every £250 you have as capital. This could be shares, savings or other investments. So if you have more than £16k saved etc you can't claim.
4. You say you want to move to contribution based ESA, but you haven't said from what. For all ESA you would also need to show you had limited capability for work or work activity. It is likely that you would have to have an assessment.
There is clearly a lot to think about here.
You may wish to speak to a specialist benefits advisor eg CAB. Here is a list of advice centres:
advicelocal.uk/

I hope this helps.
LL26