mrbluesky wrote: Hi, this is fairly new to me, but so far a great help with loads of info! I did read but cannot find it, that if you were on incapacity I think before 1995. And this was not taxable? That the government had not decided what to do with this group of claimants? If that is correct, will this group be the last to have medicals? And if so, how long before they have medicals? Taking into account they say that they are doing 500,000 per year? With 2.2 million needing to be tested. I would be very greatful for anyones advice, did I read it wrong? And any opinions. Many thanks, Keith.
mod edit: Moved as a question. Gordon
Got it from the Low Incomes Tax Reform Groups site
News- Long term sick to become much poorer
'Employment and support allowance (ESA) was introduced in October 2008 and from that date no new claims to incapacity benefit (IB) have been allowed.
There are two types of ESA – the non-taxable ‘income-based’ and the taxable ‘contribution-based’. As the names suggest, claimants qualify for the former if they are on very low incomes, but qualification for the latter is based upon claimants’ employment history and resulting National Insurance contributions record.
Proposed changes
People who have been on IB since April 1995 or before – former invalidity benefit claimants – will lose out in the amount of cash they have in their pockets. Hitherto, they have received IB tax-free. Now, this ‘transitional protection’ given at the time of the switch in 1995 to IB is to be discontinued.
The people affected are likely to be among those with the most permanent and difficult disabilities.
The complex impact on former invalidity benefit claimants
A simple switch from tax-free IB to taxable ESA is itself significant, giving many in the affected group a 20% reduction in their benefit to the extent that it exceeds their personal allowances for tax; but even more worrying is the impact on the tax credits claim of the household.
The tax-free IB is currently excluded from the income calculation for tax credits. But when it is replaced by taxable ESA, under current tax credit rules, the benefit will be included in the calculation, and that could result in tax credits being taken away at the rate of 39p in the £.
Moreover, ‘passported benefits’ – such as help with housing, council tax, healthcare costs and prescription charges – could be lost. So overall, an additional tax liability coupled with reduced tax credits and other benefits could leave the household dramatically worse off.'
