Diminishing notional capital rule
26.—(1) Where a resident is treated as possessing capital under regulation 25(1) (for the purposes of this regulation called “reducible notional capital”), for each week or part of a week that a local authority has determined that the resident shall be liable to pay for his accommodation at a higher rate than that at which he would have been assessed as liable to pay if he had no reducible notional capital, the amount of his reducible notional capital shall be reduced by the method prescribed in paragraph (2).
(2) The local authority shall reduce the amount of the resident’s reducible notional capital by the difference between—
(a)the higher rate referred to in paragraph (1); and
(b)the rate which he would have been assessed as liable to pay for his accommodation for that week or part of a week if he had been assessed as possessing no reducible notional capital.