HMRC manual EIM76186 - Social Security Benefits: Employment & Support Allowance states this in relation to income stated ESA
If a person satisfies the generic conditions for entitlement to ESA but is not entitled to received ESA(C) then they may be entitled to receive income related ESA (ESA(IR)). ESA(IR) is not taxable.
If It is deemed to be a contribution based ESA then the position is as follows:
To qualify for contribution based ESA (ESA(C)) the recipient must have paid sufficient National Insurance contributions in specified tax years, known as Relevant Income Tax Years.ESA(C) is known as a contributory benefit because unless sufficient contributions have been paid there will be no entitlement. ESA(C) is chargeable to tax as social security income. It is paid by the DWP subject to a modified system of Pay As You Earn.
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