Shiney Advice & Resource Project

Employment Advice & Information Services

There are numerous questions that will be asked when a person plans a return to work after an absence due to health problems. Some of the most prominent questions are:

1. Will I be able to keep any of the benefits I am currently receiving if I return to work? What will happen if I find that I cannot manage the job, will I be able to claim my benefits back?

2. Can I claim any benefits for my children if I go back to work?

3. How does the Permitted Work Scheme operate (formerly knows as Therapeutic Earnings)

4. Do I need to inform anyone if I return to work.

This booklet will endeavour to answer these questions, and also provide information on other areas that may be of interest to clients who may also be planning to take up a course of academic study.

Disability Living Allowance:

For clients considering going back into work, the prospect of losing their DLA can make the financial aspects of paid work insignificant if they feel that they are going to be worse off at the end of the day.

This is not always the case.  Disability Living Allowance is paid to a person in terms of how your disability or illness affects you.  Going back to work should not alter your right to FLA, as long as you can show that you have the same level of needs as you had prior to starting work. 

However, a cautionary note should be adhered to.  The Decision Maker may assume that because you are going back to work, then your condition has improved, and in such a scenario, they may reduce your award, or even withdraw it altogether.  It will therefore be up to the claimant and his/her Advisor, to prove to the Disability Benefit Unit that they are entitled to keep their award.

Carers Allowance

If someone is claiming Carer’s Allowance for you, it should not be affected as long as you continue to receive the Care Component if DLA at the middle or high rate level. The limit on earned income is £82 in any one week.

Inform the DLA Unit or not?

It is always advisable that you inform the DLA Unit that you have started work.  Failure to do this may not only result in you having to pay the overpayments back (if they decide that you are no longer entitles to an award, or reduce your current payments), but you may also face prosecution.

Voluntary Work and Benefits:

There are no restrictions on the amount of work you can do it you are incapable of work.  Voluntary work is not allowed for a close relative.  The only payment you can receive whilst carrying out voluntary work is expenses.

Permitted Work:

Permitted Work can be carried out if you are on National Insurance based Incapacity Benefit, Income Support Based Incapacity Benefit or Severe Disablement Allowance.There are three types of Permitted work;

1. Lower Level Permitted Wor

2. Higher Level Permitted Work

3. Supported Permitted Work

Lower Level Permitted Work:

The maximum you are allowed to earn on this level is £20 a week.  This work does not need to be therapeutic, and you do not need your Doctors permission to start.  The £20 limit should mean that any rent or/and council tax should not be affected, but this may depend on whether your Incapacity Benefit is based on National Insurance Contributions or if it is Income Support based. 

It may also depend on any other wages your partner might have coming into the home, or if you have other benefits coming in.

Permitted Work Higher Limit:

This type of work can only be carried out for a set period of time, and is designed to test your ability to move back into full time work.  The rules are as follows;

1. You must not exceed the 16 hours a week ruling ie; 16 hours a week is classed as full time hours, so you must not touch the 16 hour mark.

2. You cannot earn more than £78 a week after any allowable deductions – (confirm with your local DSS what these allowable deductions are)

3. You can only initially do this work for 26 weeks.  However if you can show evidence that prolonging your work will increase your chances of full time work, you should be able to stay on this level for a further 26 weeks, making a total of 52 weeks.  It is also possible that people with the most limiting health conditions may be able to stay ion this level for longer than the 52 weeks.

Caution: It is always best to find out if your Incapacity Benefit is Income Support based or National Insurance Contribution Based.  This s because Income Support is means tested against other monies coming into the household, (with the exception of Disability Living Allowance) and the chances are that any earnings from your Permitted Work may have an impact on how much Income Support you actually receive.

Whatever your Incapacity Benefit is based on, it is also advisable to check with the relevant Housing Departments and Council Tax Departments to see if any benefit entitlement will be affected.

Supported Permitted Work;

This type of work has to be supported by someone whose hob it is to provide or find work for clients with disabilities.  The Support must be ongoing and regular, but the frequency of contact can vary, depending on the needs of the client. 

Support need not be on a face to face basis, and it is acceptable by phone.  Again, as with Higher Level Permitted Work, you should not exceed the 16 hour a week mark, and you cannot earn more than £78 a week.  Also as above, care needs to be shown as to the make up of your benefit ie: Income Support based or otherwise, and relevant Housing departments and Council Tax departments should be notified.

Clients can theoretically, stay in this level of Permitted Work indefinitely, although the DWP will require a review of the situation on a regular basis (at present, the norm seems to be every two years).

Disability Premiums and Permitted Work:

If you receive Income Support in the form of a Disability Premium, because of your disability, you should keep the first £20 of any earnings (always check with the DWP to make sure).  Any earnings over £20 will see your income Support reduced pound for pound.

It is important to remember that if your Income Support is wiped out – via the pound for pound ratio, then all entitlement to full rent and council tax benefit and associated entitlements ie; free prescriptions and dental care, will also be wiped out, although you may still be eligible for a reduced rebate or payment.

Permitted Work and Medicals (Personal Capability Assessment)

A client taking part in Permitted Work should not be called for a medical any more frequently than they would normally be called.  However, if they are called for a medical, the Decision Maker (DM), is entitled to look at all the activities you are involved in as part of your permitted work.

If you were previously exempt from the Personal Capability Assessment due to the severity of your mental illness, then you should still be exempt as long as your condition remains the same.

Tax Credits

Tax Credits are designed to give financial help to people if they have children, or are working whilst on low pay, or a combination of both.

Child Tax Credits:

You can receive CTC if you or your partner have dependant children living with you, and you have a low enough income to claim.  It is worth claiming, as nine out of ten families that apply will be eligible for some amount of payment. 

Your child will be classed as dependant until the first September following their 16^th birthday.  After that date, you can still receive CTC for him or her up to the age of 19, if they continue in full time non-advanced education.  You do not have to be working to receive CTC.

If you have children and you are currently receiving Income Support for them, and you are going back to work, you will need to come off IS and inform the Inland Revenue of your change of circumstances.  They will then send you a claim pack to apply for Child Tax Credits.

Working Tax Credits:

There are four ways that you can qualify for WTC.

1. You are a lone parent or a member of a couple with dependant children

2. Have a physical or mental disability that puts you at a disadvantage in getting a job.

3. Satisfy the rules for the new 50+ element (paid for one year only)

4. Do not fit into the above categories, but are a worker aged 25 or over, and working a minimum of 30 hours a week

The Disability Element; To qualify for this element, you must be at a disadvantage in getting a job because of your physical or mental health problem.  A more in-depth explanation of the Disability Element is contained in the Application Pack for Tax Credits. 

However, to qualify for the Disabled Element, you must have been in receipt of any of the following benefits at any time in the last six months prior to claiming Working Tax Credits.

1. Incapacity benefit (for at least 28 weeks)

2. Severe Disablement Allowance

3. Income Support, Housing Benefit or Council Tax Benefit with a Disability Premium.

4. Statutory Sick Pay or Occupational Sick Pay but only if you are returning to work, and you expect to be earning 20% or at least £15 less than you were before you became ill.

The payment of Working Tax Credits and any personal changes in your circumstances can all be addressed by contacting 0845 300 3900

Prescriptions and Working Tax Credits:

This will depend on how much your gross income is, and on whether your award includes the Disability Element,

If you find you are not eligible for full prescription exemption, you should fill in the form HC1 (this covers other health costs but not prescriptions) this is available from your local Department of Works and Pensions.  You may find that you could be entitled to a part subsidy of payment.

Working Tax Credits and Housing and Council Tax Benefit

You may receive less help with benefit on your Housing and Council Tax, as WTC is means tested in these calculations.  WTC does not include any help with your mortgage interest.

Study:

Before entering into a course of study, the claimant should be aware that the rules on study are quite complex and depend on the individual circumstances of the potential student.

Prior to starting an academic course of study, it is advisable that the client (or his/her Employment Coach) approach the relevant department at the DWP for clarity.The general rules are;

1. If you are over 19 and on National Insurance Based Incapacity Benefit, you can study full time and keep your benefit.  If you are under 19, you can study up to 21 hours a week.

2. If you are on Income Support based Incapacity Benefit, and have been for at least 26 weeks, and you have a Disability Premium included in your Income Support, you can study full time or part time without your benefit being affected.

Council Tax and Study:

Again, the rules on Council Tax payment are individually based and should be followed through prior to starting a course of study.  The more generic rules are;

1. If a student is attending college for 20 hours or more, they should have a different calculation on their Council Tax than under normal circumstances

2. For study under 20 hours, payment will be calculated under the normal rules.

3. If there are two adults in the house, the Student should receive a 25% discount on their normal Council Tax calculation, whilst the other adult will have to apply for a rebate under normal provisions.

Rent

Any rent subsidy will be based on the total income going into the household.

Bursaries and Grants:

All/any bursaries or grants should be declared to the relevant departments.

Student Loans and Grants:

Important: Any entitlement to a student loan or grant must be taken by the claimant, as the Income Support Section will calculate any entitlement to Income Support on the pretext that the loan or grant has been taken.

Disability Living Allowance and Study:

As long as the needs for care and mobility have not changed, then the claimant should be entitled to keep their award of DLA

Back to Work Job Grant:

You can claim a Job Grant if you have been claiming Incapacity Benefit, Income Support, Severe Disablement Allowance or Job Seekers Allowance for at least a year before you move back into full time work.

The grant is a one off payment of £100 for single people or couples without children, or £250 for couples with children.  You must claim within three months of starting work.  More details of this grant can be obtained at the relevant DWP Department.

Benefit Protection and Linking Rules

If you have to stop working within eight weeks after coming off benefit, you can automatically go back to your previous benefit on the same rate.

You are also entitled to a 52 week Benefit Protection period that will enable you to go back onto your previous benefit within this time limit, although you will possibly go back on a reduced level of payment. 

To qualify for the 52 week linking rule, you must have been on benefits because you were incapable of work, for at least 28 weeks before you started working. The Protected benefits are;

1. Incapacity Benefit

2. Severe Disablement Allowance

3. Income Support (with a Disability Premium)

4. Income Support Mortgage Interest

5. Housing and Council Tax Benefits (with a Disability Premium)

Important: If you receive Working Tax Credits, which include an extra amount because of your disability, you may be able to go on protected Incapacity Benefit or Severe Disablement allowance for a two year period as opposed to the one year general rule.

Extended Housing and Council Tax Benefit

If you have been receiving Incapacity Benefit, Severe Disablement Allowance, or Income Support for at least 26 weeks before you move into full time work, you can continue to receive your Housing and Council tax benefit at the same rate for the first four weeks. To do this you must.

1. Inform the DWP and the Local Authority that you have started work and your payments should automatically continue.

2. Inform them within 4 weeks of starting work

3. Re-claim Housing and Council Tax benefit at the end of the 4 week period, as you may still be entitled to some help under the Low Income Scheme.

Mortgage Interest Run on

If you already receive help with your mortgage interest rate payments in your Income Support, this will continue at the same rate for the first 4 weeks.

Important Pointers:

It is very important that you inform the DWP that you have come off benefits to start paid work within 1 month, otherwise the benefit protection will not apply.  Do not assume that the DWP will automatically be aware that you have started work.

1. Your work must start within 7 days of you coming off benefit for the benefit protection rules to apply                                 

2. If your employment ends, you must send in a new sick note, and complete a new Incapacity Claim Form to get back on your old benefit.                                     

3. If you are still incapable of work after 3 months of re-claiming, you may be sent for a medical examination.  However, if you were previously exempt from medical examinations in relation to your working capabilities, this exemption should still apply, as long as your condition remains the same, and your medical diagnosis confirms the same conditions.

ShARP gratefully acknowledges the assistance of Mental Health Matters in producing this information

  Click on this link to be taken to the MHM Website

ShARP's Funders & Supporters

Northern Rock Foundation, Coalfield Regeneration Trust, Strategic Initiative Budget, Sure Start, Sunderland Teaching PCT, Lloyds TSB