Stupid Question

MarkyMarkD

This definitely wasn't a stupid question.

For some mysterious reason, Severe Disablement Allowance (which in many ways is akin to Incapacity Benefit) is NOT taxable.

It's a lesser amount than IB.

It's harder to qualify for (and indeed can't be claimed by new claimants at all).

But at least it's tax free!

Ted_Hutchinson

Others with longstanding Incapacity Benefit claims should check the tax status of their IB claim. Some people have been paying tax inadvertenly since the transfer. If you get proof from your local IB office that your claim was valid on 12 April 1995 or can be linked back to that date by using the 52week protection rules then the Inland Revenue will give you back all the tax you have paid in error and a small amount of interest as well. Comes to quite a nice amount.
From A guide to Incapacity Benefit (IB1 Apr 2004)
If you were getting Sickness Benefit or Invalidity Benefit on 12 April 1995, you were automatically transferred onto Incapacity Benefit.
These claims are known as ‘transitionally protected’.
If you were receiving Invalidity Benefit on 12 April 1995, the following provisions apply:
• Invalidity Benefit became long-term Incapacity Benefit
• benefit is not taxable
• all components payable prior to 13 April 1995 remain payable
• people under state pension age receiving Additional Pension
will continue to receive Additional Pension, but it is frozen at
1994 rates.