Incapacity benefits

What are incapacity benefits? 

The main benefit category for working-age individuals in the UK who cannot work because of a health condition or disability is referred to as incapacity benefits. Those with a disability or long-term health condition are also separately eligible for disability benefits, such as the personal independence payment (PIP), which aim to “cover the extra costs of daily living and mobility associated with disability and long-term health conditions, regardless of whether the individual is working or not”. ⁴ https://obr.uk/wtr/welfare-trends-report-october-2024/   

Incapacity benefits are mostly means-tested, whereas disability benefits are not. There is some overlap between the groups who receive incapacity and disability benefits.

Successive governments have attempted reforms of incapacity benefits, in an effort to bring down the caseload and cost. 

How much is spent on incapacity benefits?

Welfare spending has steadily increased over time as more people claim benefits. Incapacity benefits made up around 9% of total welfare spending in 2023/24, costing £27 billion in 2025/26 prices. 

How have incapacity benefits changed over time? 

From the 1970s onwards, incapacity benefits have been reformed several times as part of efforts to limit rising costs. There have been four principal models: ‘invalidity benefit’ (1971 to 1995), ‘incapacity benefit’ (1995 to 2008), ‘employment and support allowance’ (or ESA, 2008 2025), and the ‘health’ element of universal credit (from 2012). While there have been other types of incapacity benefits which individuals could claim, the bulk of payments have been for those four.

Spending on working-age incapacity benefits has remained relatively stable as a share of GDP, reaching its peak in the early 1990s; it is slightly below that level now. 

The share of the working-age population who are recipients of incapacity benefits has been increasing steadily. In 2023/24, the caseload was around 7% of the working-age population. This is the first time it has been at that level since the early 2000s. 

Universal credit, introduced in the Welfare Reform Act 2012, was a major change to the benefits system, rolling six benefits into one. Those pre-existing benefits are called ‘legacy benefits’ and many existing claimants continued to receive those even as new claimants started receiving universal credit.  

For instance, universal credit started to replace income-related ESA from 2016, and since 2018 most new claims to this benefit have been passed to universal credit. In 2024, the Department for Work and Pensions (DWP) started to issue ‘migration notices’ to all claimants of legacy benefits, with the aim of completing the switch for all by 31 March 2026.  

Contributory employment and support allowance, or ‘New Style Employment and Support Allowance’ (New Style ESA) is a separate benefit which is not means-tested and depends on a claimant’s national insurance record. 

Who is entitled to claim incapacity benefits and how much do they get?

Claimants with a disability or health condition usually need a work capability assessment (WCA) to claim UC or New Style ESA. This is an assessment carried out in an interview, either in person, on the phone or by video call, with an assessor who categorises the claimant as either able to work, able to prepare for work or unable to work or engage in any work-related activities. Anyone over the state pension age or who are not resident in the UK is not eligible. 

Universal credit 

To qualify for universal credit, a claimant will fall into one of three categories: fit for work, limited capability for work (LCW), limited capability for work and work related activity (LCWRA). Each category has different conditions attached. People who have the most serious level of health problems or disability (in the LCWRA group) may qualify for the health component of UC.  

The health element of universal credit is worth £423 a month (around £97 a week) in 2025/26, which is paid on top of the standard allowance (£400 a month, or around £92 a week) and any other additions including for children, childcare costs, caring responsibilities or housing costs.

Universal credit is means-tested, so anyone with savings of over £16,000, or whose income exceeds a certain monthly threshold, will not qualify. As it is a household benefit, if an individual lives with a partner or is married, the partner’s income and savings also count towards these eligibility tests.  

New Style ESA 

Anyone who has been working for the past two or three years might have made enough national insurance contributions to also (or instead) be eligible for New Style ESA. Based on the same WCA, they would be assessed as falling into one of three categories: fit for work, work-related activity group (WRAG), or support group (SG).  

Those aged 25 and over in the WRAG receive £400 a month (around £92.05 a week), while those in the SG receive an additional £48.50, amounting to £610 a month (around £140.55 a week).  

New Style ESA is time-limited for a year if the claimant is in the WRAG. There is no time limit if the claimant is in the SG.  

People receiving New Style ESA can also claim universal credit. If they do, their ESA payments are treated as income, meaning some of their universal credit entitlement may be reduced.