Tax Credits Act 2002 Schedule 3 para 37

Incapacity benefit: days and periods of incapacity for work

Schedule 3 paragraph 37 amends the rules on incapacity benefit so that certain days when a person was receiving tax credits can count as days of incapacity for work, helping them re-qualify for higher-rate short-term or long-term incapacity benefit after leaving qualifying remunerative work.

• When a person stops qualifying remunerative work (as defined for tax credits purposes) and claims higher-rate short-term or long-term incapacity benefit, days spent satisfying relevant tax credit conditions can be treated as days of incapacity for work.
• Three conditions must be met: the day after ceasing work was a day of incapacity; the person was entitled to the higher-rate short-term or long-term incapacity benefit within the previous two years; and the person satisfied the relevant tax credit conditions on the day before ceasing work.
• A person satisfies the relevant tax credit conditions on any day if they are entitled to the disability element of working tax credit (or would be entitled but for their income being too high) on a claim made by them alone or jointly.
• In addition, either working tax credit or any element of child tax credit other than the family element must actually be paid in respect of that day on such a claim.