Claiming state benefits

Published  28 February 2024
   10 min read

This case study explores how different state benefits can be used when somebody is unable to work due to illness.

Key facts

  • Universal Credit is a payment to help people with their living costs and is paid monthly for most claimants.
  • Income related Employment & Support Allowance is part of Universal Credit and is claimable based on a means testing of household income and savings available.
  • Citizens Advice recommends that the application for Employment & Support Allowance should be submitted around 3 months before the end of Statutory Sick Pay to help try and avoid any delays.

Bob, 28 is an employed worker in a predominantly stressful job. There are no sick pay benefits available to him other than state benefits and Bob has no protection insurance. Bob typically has to take work home at the weekends to meet important deadlines and he has to manage this along with being a husband and a dad to his 3 very young children.

He works in a big city and he spends a total of around 2 hours every day travelling into the office and travelling home. Recently, friends, family and work colleagues have all noticed a change in Bob’s behaviour and some of them have mentioned it to him.

Bob seems distant, quiet and isolated from any group conversations. He doesn’t want to acknowledge there is anything wrong and doesn’t want to talk about it, not even to his wife Sam. After a few weeks, Bob’s wife makes an appointment for Bob to see his GP. 

The GP diagnoses that Bob is struggling with depression and anxiety. The doctor prescribes some counselling and a course of medication. The doctor also recommends that Bob needs to take some time off work. An initial ‘fit note’ for 4 weeks is given to Bob. Bob sends the ‘fit note’ to his employer and officially goes off work sick.

Statutory Sick Pay is paid to Bob and he receives it through pay as you earn on the normal day he is paid each month. Statutory Sick Pay is paid after being off work sick for 4 or more days in a row which includes non-working days. The current rate of statutory sick pay is £109.40 a week. Statutory Sick Pay is only available to employees (not self-employed) and is paid for a period of up to 28 weeks. 

Universal Credit

Universal Credit is a payment to help people with their living costs. It's paid monthly for most claimants, but twice a month for some people who live in Scotland. Universal Credit provides certain benefits for claimants who are on low incomes or are out of work. It can be paid to the self-employed. 

Universal Credit replaced 6 existing means tested benefits which are:

  • Child Tax Credit
  • Housing Benefit
  • Income Support
  • Income-based Jobseeker’s Allowance 
  • Income-related Employment and Support Allowance 
  • Working Tax Credit

Bob applies to find out what benefit he can claim to provide him with a replacement income. If Bob qualifies for Universal Credit, he will receive a single monthly payment which can cover a variety of the components mentioned above. 

Employment & Support Allowance

There are different types of Employment & Support Allowance. What was known as income-related Employment & Support Allowance is now part of Universal Credit and is claimable based on a means testing of household income and savings available. There is also a non means tested version of Employment & Support Allowance which is related to National Insurance contributions called ‘New Style Employment & Support Allowance’. This is not part of Universal Credit and cannot be paid at the same time at the same time as Statutory Sick Pay.

Let’s say that Bob is still off work sick after his Statutory Sick Pay ends (28 weeks).

Citizens Advice recommends that the application for New Style Employment & Support Allowance should be submitted around 3 months before the end of Statutory Sick Pay to help try and avoid any delays. The application to claim New Style Employment & Support Allowance and Universal Credit can be completed online or over the phone.

Support for Mortgage Interest

Another state benefit Bob could potentially claim is Support for Mortgage Interest. Support for Mortgage Interest is a loan which has the aim to help claimants pay the interest payments on their mortgage or other loans for home purchase, repairs and home improvements.

But this is a loan – not a benefit. The loan will accrue interest at a rate set by the Department for Work and Pensions and must be repaid when the claimant sells or transfers ownership of the property (provided there is enough equity in the property).

Homeowners (or people treated as liable for owner-occupier payments) who are entitled to one of the following benefits could qualify for Support for Mortgage Interest: 

  • Income Support
  • Income-based Jobseeker’s Allowance
  • Income-related Employment and Support Allowance
  • Pension Credit
  • Universal Credit providing you're not in paid employment or self-employment 

So, let’s say Bob applies for a Support for Mortgage Interest because he has been off work sick and needs help to meet his financial obligations as well as his mortgage payments. Bob has a mortgage of £150,000 with a term of 30 years. His mortgage is capital and interest (repayment). The interest rate is 4% fixed for 5 years and means his monthly mortgage payment is £716 per month.

If Bob is claiming one of the above benefits, he would have had to have served the relevant waiting period before he could receive the Support for Mortgage Interest. The waiting period is normally 39 weeks. People who are in receipt of Pension Credit would not have a waiting period. 

If Bob is successful in his application for Support for Mortgage Interest, and if the interest rate for SMI was 3%, he could expect to receive around £375 per month to help with mortgage interest costs. Interest would accrue on the amount of loan paid to Bob at a higher rate of interest. The rates of interest are set by the Department for Work and Pensions and published on the Support for Mortgage Interest (SMI): What you'll get page.

The Department for Work and Pensions will not do a credit check on applicants for Support for Mortgage Interest.  

Any other benefits

Bob could potentially claim other state benefits depending upon his circumstances. However, it is very difficult to accurately portray what a claimant would actually and specifically qualify for without taking many other factors into consideration.

We’ve seen eligibility for various benefits change frequently and here is a list of just some of the factors which directly affect whether a claimant would qualify for any type of state benefit:

  • age
  • employment status
  • income
  • partners age
  • savings
  • investments
  • children
  • age of children
  • level of National Insurance contributions paid
  • amount of mortgage
  • interest Rate of mortgage
  • being in receipt of other benefits


The information provided is based on our current understanding of the relevant legislation and regulations and may be subject to alteration as a result of changes in legislation or practice. Also it may not reflect the options available under a specific product which may not be as wide as legislations and regulations allow.

All references to taxation are based on our understanding of current taxation law and practice and may be affected by future changes in legislation and the individual circumstances of the investor.