I am trying to get my head around the rules in relation to ESA and permitted work, and how this affects other mean tested benefit entitlement.

My client is currently in receipt of ESA (contribution based) but also works part-time under the Permitted Work Higher Limits. She has been awarded full HB based on her ESA entitlement however I am not sure if this is correct. According to CPAG and Disability Alliance handbooks she would get full HB if she was on Income based but does not mention contribution based.

Can anyone point me in the right direction in relation to the regs?

You are right - it is only the income of someone on income-related ESA which is disregarded (paragraph 4 of Schedule 5 to the Housing Benefit Regulations). This seems to have the odd consequence that a person who has permitted earnings disregarded both for ESA and HB if on an income-related ESA, would have the earnings taken into account in the HB assessment if it was a national insurance based only ESA instead

...and I forgot to say that your client's HB seems to be wrong unless the permitted earnings are below the level disregarded in Schedule 4

This anomaly - ie there being no equivalent of the £92 (soon to be £93) disregard for HB/CTB claimants on ESA(C) - was widely commented on when ESA came in.

It should be fixed next April.

(see http://www.dwp.gov.uk/docs/issue-89-may-2009.pdf - page 3)

"... a new permitted work
earnings disregard of up to £92.00 a week will be introduced in HB/CTB for customers who are claiming contributory ESA,
IB or SDA. This will align with HB/CTB permitted work policy for those getting income-related ESA. Current plans are to
introduce the change from April 2010"