Incapacity Benefit and the Contribution Conditions

The first contribution condition.

In order to qualify for short term incapacity benefit the applicant has to have:

• actually paid Class 1 contributions in one of the three last complete tax years on earnings of 25 times the lower earnings limit for that particular year; or
• 25 Class 2 contributions in any of the three last complete tax years; or
• a mixture of Class 1 and Class 2 totalling 25 in any of the three last complete tax years.

The lower earnings limit for the last three tax years are-

2004-2005 = £79

2005-2006 = £82

2006-2007 = £84

Class 1 National Insurance contributions are paid by employed people as a percentage of their earnings. Class 2 NI contributions are paid by self-employed people at a standard weekly rate.

Exceptions.

Contributions in any complete tax year will count if -

• The claimant was entitled to Carers' Allowance or would have been getting it were it not "overlapped" by another benefit, for at least a week in the last complete tax year before the benefit year in which the claim for IB is made.
• The claimant was being paid either the disability or severe disability elements within the working tax credits calculation for at least two years immediately prior to the first day of incapacity.
• The claimant received Incapacity Benefit in the tax year before the benefit year in which the current period of incapacity began.

The second contribution condition.

In addition to meeting the first condition the claimant must also have paid (or have been treated as having paid) Class 1 or Class 2 contributions amounting to at least 50 times the lower earnings limit in each of the two relevant tax years.

The relevant tax years are those that precede the benefit year in which the claim is made. To make things a little more complex, the benefit year runs from the first Sunday in January whereas the tax year starts in April. This means that the tax years 2004-2005 and 2006-2007 (for example) would be the two relevant tax years for a claim made in February 2007.

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