The simple answer to the pensions section of your question is that pensions (including the state pension) are generally subject to income tax – but not Nationa Insurance contributions.
The benefits side of your question is a bit more involved. The first thing is to ensure you are definitely on Incapacity Benefit and not ESA (Employment & Support Allowance): the rules are different! Assuming it is IB, if you started getting Incapacity Benefit on or after 6th April 2001, your benefit may be reduced if you receive certain types of pension payments. It includes personal, occupation or public service pension schemes as well as some other schemes (like permanent health insurance policies in certain circumstances).
For 2009/10 if the total amount of the gross pension payment amounted to more than £85 per week, Incapacity Benefit is reduced by half the amount of pension payments above the £85 a week. If you get £85 or less each week (gross pension payments) then IB is not affected. I have not seen anything that says this figure is different for 2010/11.
There are other exceptions such as if you get the highest rate of Disability Living Allowance care component, then pension payments are ignored for IB. If you were entitled to IB before 6th April 2001 there are some differences.
You may find the information at the
Directgov website helpful. It may be worth going to a welfare rights agency like Citizens Advice for a full benefits check to find out a) whether the change will have any impact, b) if it does, whether you can claim other benefits and c) whether any other state help, such as Housing Benefit could be affected.
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