Hello everyone,

First day back at work after the holidays and I'm wondering if you can help please!

My client has applied for contribution-based ESA and has been turned down for not having paid enough Ni contributions in the relevant tax years: 2007-2008 and 2008-2009. Her earnings were £8,500 and £2,975 respectively.

Is this correct?

I'd be really grateful for your help as I don't really understand how it's calculated and don't trust the DWP all that much

Many thanks

Bea

Please see Disability Rights Handbook p61 for a clear outline of NICs for contribution-based ESA. If client claimed after 1st Sunday of 2010 (ie yesterday or today), the relevant tax years are indeed: 2007-2008 and 2008-2009, in which case I think she fails the '2nd condition' for year when her earnings were £2,975. But if she made her ESA claim in (benefits year) 2009, the relevant tax years are 2006-7 and 2007-2008.

PS. the '2nd condition' covers credits as well as paid NICs. Apart from earning £2,975, what else did she do in 2007-2008? If she claimed benefits she may have NI credits to add to the earnings-related NICs.

Just to add to what Robbie has said, the first contribution condition for ESA is that the claimant has paid contributions on earnings equal to 25 times the lower earnings limit in any one of the three tax years prior to the relevant benefit year. The second condition, as Robbie says, can take credits into account as well and the claimant must have been paid or credited with contributions on earnings equal to 50 times the lower earnings limit in each of the last two tax years prior to the relevant benefit year.

Thank you so much guys! That's great news because I helped her make a telephone claim before Christmas. Does that mean that they were wrong to take into account 2007-2008 and 2008-2009? Should they have taken into account 2006-2007 and 2007-2008?
She was on SSP most of the time in tax year 2008-2009, that's why her income was much lower. Would she have been credited with credits while on SSP? I guess it doesn't matter if the relevant tax years are 2006-2007 and 2007-2008 as her income was around £8,000 for both.

Hi, you've probably dealt with this by now... Anyway, yes, for a claim made before Christmas 2009, the relevant NIC years are the tax years 2006-2007 and 2007-2008. And yes, a week on SSP credits you with earnings equal to the lower earnings limit, ie one of the 50 NICs needed for the 2nd condition (CPAG p746 last bullet).

Thanks, that's really helpful. I sent it a GL24 last week saying that they considered the wrong tax years.
Bea