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The State Pension Credit Regulations 2002

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PART IIIIncome

Calculation of income and capital

14.  The income and capital of—

(a)the claimant; and

(b)any partner of the claimant,

shall be calculated in accordance with the rules set out in this Part; and any reference in this Part to the claimant shall apply equally to any partner of the claimant.

Income for the purposes of the Act

15.—(1) For the purposes of section 15(1)(e) (income), all social security benefits are prescribed except—

[F1(za)universal credit;]

(a)disability living allowance;

[F2(aa)personal independence payment;]

(ab)[F3armed forces independence payment;]

(b)attendance allowance payable under section 64 of the 1992 Act;

(c)an increase of disablement pension under section 104 or 105 of the 1992 Act;

(d)a payment under regulations made in exercise of the power conferred by paragraph 7(2)(b) of Part II of Schedule 8 to the 1992 ActM1;

(e)an increase of an allowance payable in respect of constant attendance under paragraph 4 of Part I of Schedule 8 to the 1992 Act;

(f)any child special allowance payable under section 56 of the 1992 Act;

(g)any guardian’s allowance payable under section 77 of the 1992 Act;

(h)any increase for a dependant, other than the claimant’s partner, payable in accordance with Part IV of the 1992 Act;

(i)any social fund payment made under Part VIII of the 1992 Act;

(j)child benefit payable in accordance with Part IX of the 1992 Act;

(k)Christmas bonus payable under Part X of the 1992 Act;

[F4(l)housing benefit;

F5(m). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(n)[F6bereavement support payment under section 30 of the Pensions Act 2014;]

(o)statutory sick pay;

(p)statutory maternity pay;

(q)[F7ordinary statutory paternity pay payable under Part 12ZA of the 1992 Act;]

F8(qa). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

[F9(qb)statutory shared parental pay payable under Part 12ZC of the 1992 Act;]

[F10(qc)statutory parental bereavement pay payable under Part 12ZD of the 1992 Act;]

(r)statutory adoption pay payable under Part 12ZB of the 1992 Act;

[F11(ra) carer’s allowance supplement payable under section 81 of the Social Security (Scotland) Act 2018;]

[F12(rb)early years assistance given in accordance with section 32 of the Social Security (Scotland) Act 2018;]

[F13(rc)funeral expense assistance given in accordance with section 34 of the Social Security (Scotland) Act 2018.]

[F14(rd)any Scottish child payment assistance given in accordance with section 79 of the Social Security (Scotland) Act 2018.]

[F15(re)any assistance given in accordance with the Carer’s Assistance (Young Carer Grants) (Scotland) Regulations 2019;]

[F16(rf)short-term assistance given in accordance with regulations made under section 36 of the Social Security (Scotland) Act 2018;]

[F17(rg)winter heating assistance given in accordance with regulations made under section 30 of the Social Security (Scotland) Act 2018;]

[F18(rh)disability assistance given in accordance with regulations made under section 31 of the Social Security (Scotland) Act 2018;]

(s)any benefit similar to those mentioned in the preceding provisions of this paragraph payable under legislation having effect in Northern Ireland.]

[F19(2) For the purposes of section 15(1)(f) (foreign social security benefits) of the Act, income includes—

(a)all foreign social security benefits which are similar to the social security benefits prescribed under paragraph (1), and

(b)any foreign state retirement pension.]

(3) Where the payment of any social security benefit prescribed under paragraph (1)[F20, or retirement pension income to which section 16(1)(za) to (e) applies,] is subject to any deduction (other than an adjustment specified in paragraph (4)) the amount to be taken into account under paragraph (1)[F21, or section 16(1)(za) to (e),] shall be the amount before the deduction is made.

(4) The adjustments specified in this paragraph are those made in accordance with—

(a)the Social Security (Overlapping Benefits) Regulations 1979M2;

[F22(b)regulation 2 of the Social Security (Hospital In-Patients) Regulations 2005;]

(c)section 30DD or section 30E of the 1992 ActM3 (reductions in incapacity benefit in respect of pensions and councillor’s allowances).

[F23(d)section 3 of the Welfare Reform Act (deductions from contributory allowance).]

[F24(e)section 14 of the Pensions Act 2014 (pension sharing: reduction in the sharer’s section 4 pension);

(f)section 45B or 55B of the Social Security Contributions and Benefits Act 1992 (reduction of additional pension in Category A retirement pension and shared additional pension: pension sharing).]

[F25(g)regulation 16(2) of the Carer’s Assistance (Carer Support Payment) (Scotland) Regulations 2023.]

(5) For the purposes of section 15(1)(j) (income to include income of prescribed descriptions), income of the following descriptions is prescribed—

[F26(a)a payment made—

(i)under article 30 of the Naval, Military and Air Forces Etc. (Disablement and Death) Service Pensions Order 2006, in any case where article 30(1)(b) applies; or

(ii)under article 12(8) of that Order, in any case where sub-paragraph (b) of that article applies;]

[F27(aa)a guaranteed income payment;

(ab)a payment made under article 21(1)(c) of the Armed Forces and Reserve Forces (Compensation Scheme) Order 2005[F28, in any case where article 23(2)(c) applies];]

[F29(ac)any retired pay, pension or allowance granted in respect of disablement or any pension or allowance granted to a widow, widower or surviving civil partner in respect of a death due to service or war injury under an instrument specified in section 639(2) of the Income Tax (Earnings and Pensions) Act 2003, where such payment does not fall within paragraph (a) of the definition of “war disablement pension” in section 17(1) of the State Pension Credit Act 2002 or, in respect of any retired pay or pension granted in respect of disablement, where such payment does not fall within paragraph (b) of that definition;]

[F30(b)a pension paid by a government to victims of National Socialist persecution;]

(c)payments under a scheme made under the Pneumoconiosis etc. (Worker’s Compensation) Act 1979M4;

(d)payments made towards the maintenance of the claimant by his spouse[F31, civil partner, former spouse or former civil partner] or towards the maintenance of the claimant’s partner by his spouse[F31, civil partner, former spouse or former civil partner], including payments made—

(i)under a court order;

(ii)under an agreement for maintenance; or

(iii)voluntarily;

(e)payments due from any person in respect of board and lodging accommodation provided by the claimantF32...;

[F33(f)royalties or other sums paid as a consideration for the use of, or the right to use, any copyright, design, patent or trade mark;]

[F34(g)any payment in respect of any—

(i)book registered under the Public Lending Right Scheme 1982; or

(ii)work made under any international public lending right scheme that is analogous to the Public Lending Right Scheme 1982;]

[F35(h)any income in lieu of that specified in—

(i)paragraphs (a) to (i) of section 15(1) of the Act, or

(ii)in this regulation;

(i)any payment of rent made to a claimant who—

(i)owns the freehold or leasehold interest in any property or is a tenant of any property;

(ii)occupies part of that property; and

(iii)has an agreement with another person allowing that person to occupy that property on payment of rent.]

[F36(j)any payment made at regular intervals under an equity release scheme.]

[F37(k) PPF periodic payments.]

[F38(6) For the purposes of section 15(2) (deemed income from capital) and subject to regulation 17(8) (capital to be disregarded), a claimant’s capital shall be deemed to yield a weekly income of—

(a)£1 for each £500 in excess of £10,000; and

(b)£1 for any excess which is not a complete £500.]

F39(7) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

F39(8) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Textual Amendments

F6Reg. 15(1)(n) substituted (coming into force in accordance with art. 1-3 of the amending S.I.) by The Pensions Act 2014 (Consequential, Supplementary and Incidental Amendments) Order 2017 (S.I. 2017/422), arts. 1(2), 21(2)

F7Reg. 15(1)(q)(qa) substituted for reg. 15(1)(q) (1.4.2012) by The Social Security (Miscellaneous Amendments) Regulations 2012 (S.I. 2012/757), regs. 1(4), 5(3)

F12Reg. 15(1)(rb) inserted (coming into force in accordance with art. 1(2) of the amending S.I.) by The Social Security (Scotland) Act 2018 (Best Start Grants) (Consequential Modifications and Saving) Order 2018 (S.I. 2018/1138), art. 7(2)

F26Reg. 15(5)(a) substituted (for specified purposes and with effect in accordance with reg. 1(2) of the amending S.I.) by The Social Security (Miscellaneous Amendments) (No. 7) Regulations 2008 (S.I. 2008/3157), regs. 1(2), 4(3)(a)

F33Reg. 15(5)(f) substituted (for specified purposes and with effect in accordance with reg. 1(4) of the amending S.I.) by The Social Security (Miscellaneous Amendments) Regulations 2009 (S.I. 2009/583), reg. 5(2)(a)

F34Reg. 15(5)(g) substituted (for specified purposes and with effect in accordance with reg. 1(4) of the amending S.I.) by The Social Security (Miscellaneous Amendments) Regulations 2009 (S.I. 2009/583), reg. 5(2)(b)

Marginal Citations

M1 See in particular paragraph 7(2)(b) of Schedule 8.

M3Sections 30DD and 30E were inserted by section 3(1) of the Social Security (Incapacity for Work) Act 1994 (c. 18).

M41979 c. 41; amended by section 24 of the Social Security Act 1985 (c. 53).

Retirement pension income

16.  There shall be added to the descriptions of income listed in section 16(1) (retirement pension income) the following [F40paragraphs]—

“(k)any sum payable by way of pension out of money provided under the Civil List Act 1837M5, the Civil List Act 1937M6, the Civil List Act 1952M7, the Civil List Act 1972 M8 or the [F41Civil List Act 1975] M9[F42;

(1) any payment, other than a payment ordered by a court or made in settlement of a claim, made by or on behalf of a former employer of a person on account of the early retirement of that person on grounds of ill-health or disability.]

[F43(m)any payment made at regular intervals under an equity release scheme.]

[F44(n)any payment made under the Financial Assistance Scheme Regulations 2005.”]

Textual Amendments

Marginal Citations

Calculation of weekly income

17.—(1) Except where paragraph (2) and (4) apply, for the purposes of calculating the weekly income of the claimant, where the period in respect of which a payment is made—

(a)does not exceed a week, the whole of that payment shall be included in the claimant’s weekly income;

(b)exceeds a week, the amount to be included in the claimant’s weekly income shall be determined—

(i)in a case where that period is a month, by multiplying the amount of the payment by 12 and dividing the product by 52;

(ii)in a case where that period is three months, by multiplying the amount of the payment by 4 and dividing the product by 52;

(iii)in a case where that period is a year, by dividing the amount of the payment by 52;

(iv)in any other case, by multiplying the amount of the payment by 7 and dividing the product by the number of days in the period in respect of which it is made.

(2) Where—

(a)the claimant’s regular pattern of work is such that he does not work the same hours every week; or

(b)the amount of the claimant’s income fluctuates and has changed more than once,

the weekly amount of that claimant’s income shall be determined—

(i)if, in a case to which sub-paragraph (a) applies, there is a recognised cycle of work, by reference to his average weekly income over the period of the complete cycle (including, where the cycle involves periods in which the claimant does no work, those periods but disregarding any other absences); or

(ii)in any other case, on the basis of—

(aa)the last two payments if those payments are one month or more apart;

(bb)the last four payments if the last two payments are less than one month apart; or

(cc)such other payments as may, in the particular circumstances of the case, enable the claimant’s average weekly income to be determined more accurately.

(3) For the purposes of paragraph (2)(b) the last payments are the last payments before the date the claim was made or treated as made or, if there is a subsequent supersession under section 10 of the Social Security Act 1998 M10, the last payments before the date of the supersession.

(4) If a claimant is entitled to receive a payment to which paragraph (5) applies, the amount of that payment shall be treated as if made in respect of a period of a year.

(5) This paragraph applies to—

[F45(a)royalties or other sums received as a consideration for the use of, or the right to use, any copyright, design, patent or trade mark;]

[F46(b)any payment in respect of any—

(i)book registered under the Public Lending Right Scheme 1982; or

(ii)work made under any international public lending right scheme that is analogous to the Public Lending Right Scheme 1982;]

(c)any payment which is made on an occasional basis.

(6) Where payments are made in a currency other than Sterling, the value of the payment shall be determined by taking the Sterling equivalent on the date the payment is made.

(7) Income specified in Schedule IV is to be disregarded in the calculation of a claimant’s income.

(8) Schedule V shall have effect so that—

(a)the capital specified in Part I shall be disregarded for the purpose of determining a claimant’s income; and

(b)the capital specified in Part II shall be disregarded for the purpose of determining a claimant’s income under regulation 15(6).

[F47(9) The sums specified in Schedule VI shall be disregarded in calculating—

(a)the claimant’s earnings; and

(b)[F48any amount to which paragraph (5) applies where the claimant is the first owner of the copyright, design, patent or trademark, or an original contributor to the book or work referred to in paragraph (5)(b).]

(9A) For the purposes of paragraph (9)(b), and for that purpose only, the amounts specified in paragraph (5) shall be treated as though they were earnings.]

(10) [F49Subject to regulation [F5017B(6)] (deduction of tax and contributions for self-employed earners),] in the case of any income taken into account for the purpose of calculating a person’s income, there shall be disregarded—

(a)any amount payable by way of tax;

(b)any amount deducted by way of National Insurance Contributions under the 1992 Act or under the Social Security Contributions and Benefits (Northern Ireland) Act 1992M11;

F51(c). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

[F52(11) In the case of the earnings of self-employed earners, the amounts specified in paragraph (10) shall be taken into account in accordance with paragraph (4) or, as the case may be, paragraph (10) of regulation 13 of the Computation of Earnings Regulations, as having effect in the case of state pension credit.]

Textual Amendments

F45Reg. 17(5)(a) substituted (for specified purposes and with effect in accordance with reg. 1(4) of the amending S.I.) by The Social Security (Miscellaneous Amendments) Regulations 2009 (S.I. 2009/583), reg. 5(3)(a)

F46Reg. 17(5)(b) substituted (for specified purposes and with effect in accordance with reg. 1(4) of the amending S.I.) by The Social Security (Miscellaneous Amendments) Regulations 2009 (S.I. 2009/583), reg. 5(3)(b)

F48Reg. 17(9)(b) substituted (for specified purposes and with effect in accordance with reg. 1(4) of the amending S.I.) by The Social Security (Miscellaneous Amendments) Regulations 2009 (S.I. 2009/583), reg. 5(3)(c)

Marginal Citations

[F53Treatment of final payments of income

17ZA.—(1) Save where regulation 13B applies, this regulation applies where—

(a)a claimant has been receiving a regular payment of income;

(b)that payment is coming to an end or has ended; and

(c)the claimant receives a payment of income whether as the last of the regular payments or following the last of them (“the final payment”).

(2) For the purposes of regulation 17(1)—

(a)where the amount of the final payment is less than or equal to the amount of the preceding, or the last, regular payment, the whole amount shall be treated as being paid in respect of a period of the same length as that in respect of which that regular payment was made;

(b)where the amount of the final payment is greater than the amount of that regular payment—

(i)to the extent that it comprises (whether exactly or with an excess remaining) one or more multiples of that amount, each such multiple shall be treated as being paid in respect of a period of the same length as that in respect of which that regular payment was made; and

(ii)any excess shall be treated as paid in respect of a further period of the same length as that in respect of which that regular payment was made.

(3)  A final payment referred to in paragraph (2)(a) shall, where not in fact paid on the date on which a regular payment would have been paid had it continued in payment, be treated as paid on that date.

(4) Each multiple and any excess referred to in paragraph (2)(b) shall be treated as paid on the dates on which a corresponding number of regular payments would have been made had they continued in payment.

(5) For the purposes of this regulation, a “regular payment” means a payment of income made in respect of a period—

(a)referred to in regulation 17(1)(a) or (b) on a regular date; or

(b)which is subject to the provisions of regulation 17(2).]

Textual Amendments

[F54Earnings of an employed earner

17A.—(1) For the purposes of state pension credit, the provisions of this regulation which relate to the earnings of employed earners, shall have effect in place of those prescribed for such earners in the Computation of Earnings Regulations.

(2) Subject to paragraphs [F55(3), (4) and (4A)], “earnings” in the case of employment as an employed earner, means any remuneration or profit derived from that employment and includes—

(a)any bonus or commission;

(b)any payment in lieu of remuneration except any periodic sum paid to a claimant on account of the termination of his employment by reason of redundancy;

(c)any payment in lieu of notice;

(d)any holiday pay;

(e)any payment by way of a retainer;

(f)any payment made by the claimant’s employer in respect of expenses not wholly, exclusively and necessarily incurred in the performance of the duties of the employment, including any payment made by the claimant’s employer in respect of—

(i)travelling expenses incurred by the claimant between his home and place of employment;

(ii)expenses incurred by the claimant under arrangements made for the care of a member of his family owing to the claimant’s absence from home;

(g)the amount of any payment by way of a non-cash voucher which has been taken into account in the computation of a person’s earnings in accordance with Part V of Schedule 3 to the Social Security (Contributions) Regulations 2001;

(h)statutory sick pay and statutory maternity pay payable by the employer under the 1992 Act;

[F56(i)F57... statutory paternity pay payable under Part 12ZA of the 1992 Act;]

F58(ia). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

[F59(ib)statutory shared parental pay payable under Part 12ZC of the 1992 Act;]

[F60(ic)statutory parental bereavement pay payable under Part 12ZD of the 1992 Act;]

(j)statutory adoption pay payable under Part 12ZB of the 1992 Act;

(k)any sums payable under a contract of service—

(i)for incapacity for work due to sickness or injury; or

(ii)by reason of pregnancy or confinement.

(3) “Earnings” shall not include—

(a)subject to paragraph (4), any payment in kind;

(b)any payment in respect of expenses wholly, exclusively and necessarily incurred in the performance of the duties of the employment;

(c)any occupational pension;

(d)any lump sum payment made under the Iron and Steel Re-adaptation Benefits Scheme[F61;

(e)any payment of compensation made pursuant to an award by an employment tribunal in respect of unfair dismissal or unlawful discrimination]

[F62(f)any payment in respect of expenses arising out of the [F63claimant participating as a service user].]

(4) Paragraph (3)(a) shall not apply in respect of any non-cash voucher referred to in paragraph (2)(g).

[F64(4A) One half of any sum paid by a claimant by way of a contribution towards an occupational pension scheme or a personal pension scheme shall, for the purpose of calculating his earnings in accordance with this regulation, be disregarded.]

(5) In this regulation “employed earner” means a person who is gainfully employed in Great Britain either under a contract of service, or in an office (including elective office) with emoluments chargeable to income tax under Schedule E.

Textual Amendments

F56Reg. 17A(2)(i)(ia) substituted for reg. 17A(2)(i) (1.4.2012) by The Social Security (Miscellaneous Amendments) Regulations 2012 (S.I. 2012/757), regs. 1(4), 5(4)

F62Reg. 17A(3)(f) added (for specified purposes and with effect in accordance with reg. 1(2) of the amending S.I.) by The Social Security (Miscellaneous Amendments) (No. 4) Regulations 2009 (S.I. 2009/2655), regs. 1(2)(c), 5(3)

Earnings of self-employed earners

17B.—(1) For the purposes of state pension credit, the provisions of the Computation of Earnings Regulations in their application to the earnings of self-employed earners, shall have effect in so far as provided by this regulation.

(2) In their application to state pension credit, regulations 11 to 14 of the Computation of Earnings Regulations shall have effect as if—

[F65(za)“board and lodging accommodation” has the same meaning as in [F66regulation 1(2)];]

(a)“claimant” referred to a person claiming state pension credit and any partner of the claimant;

(b)“personal pension scheme” referred to a personal pension scheme—

(i)as defined in section 1 of the Pension Schemes Act 1993; or

(ii)as defined in section 1 of the Pension Schemes (Northern Ireland) Act 1993.

(3) In regulation 11 (calculation of earnings of self-employed earners), paragraph (1) shall have effect, but as if the words “Except where paragraph (2) applies” were omitted.

(4) In regulation 12 (earnings of self-employed earners)—

(a)paragraph (1) shall have effect;

(b)[F67the following paragraph shall be added after paragraph (1)]—

“(2) Earnings does not include—

(a)where a claimant occupies a dwelling as his home and he provides in that dwelling board and lodging accommodation for which payment is made, those payments;

[F68(b) any payment made by a local authority to a claimant with whom a person is accommodated by virtue of arrangements made under—

(i)[F69section 22C(2) of the Children Act 1989 (ways in which looked after children are to be accommodated and maintained),]

[F70(ia)section 81(2) of the Social Services and Well-being (Wales) Act 2014 (ways in which looked after children are to be accommodated and maintained),]

(ii)[F71section 26 or 26A of the Children (Scotland) Act 1995 (manner of provision of accommodation to child looked after by local authority and duty to provide continuing care), or]

(iii)regulations 33 or 51 of the Looked After Children (Scotland) Regulations 2009 (fostering and kinship care allowances and fostering allowances);]

(c)any payment made by a voluntary organisation in accordance with section 59(1)(a) of the Children Act 1989 (provision of accommodation by voluntary organisations);

(d)any payment made to the claimant or his partner for a person (“the person concerned”) who is not normally a member of the claimant’s household but is temporarily in his care, by—

(i)a health authority;

(ii)a local authority;

(iii)a voluntary organisation;

(iv)the person concerned pursuant to section 26(3A) of the National Assistance Act 1948; F72...

[F73(iva)[F74an integrated care board] established under section 14D of the National Health Service Act 2006;

(ivb)[F75NHS England]; F76...]

F77(v). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

[F78(vi)a Local Health Board established under section 16BA of the National Health Service Act 1977 or established by an order made under section 11 of the Health Service (Wales) Act;] F79...

[F80(vii)the person concerned where the payment is for the provision of accommodation in respect of the meeting of that person’s needs under section 18 or 19 of the Care Act 2014 (duty and power to meet needs for care and support);] [F81or]

[F81(viii)the person concerned where the payment is for the provision of accommodation to meet that person’s needs for care and support under section 35 or 36 of the Social Services and Well-being (Wales) Act 2014 (duty and power to meet care and support needs of an adult);]

[F82(da)any payment or part of a payment made by a local authority in accordance with section 26A of the Children (Scotland) Act 1995 (duty to provide continuing care) to a person (“A”) which A passes on to the claimant where A—

(i)was formerly in the claimant’s care;

(ii)is aged 16 or over; and

(iii)continues to live with the claimant;]

[F83(db) any payment made to a claimant under section 73(1)(b) of the Children and Young People (Scotland) Act 2014 (kinship care assistance).]

(e)any sports award.”.

(5) In regulation 13 (calculation of net profit of self-employed earners)—

(a)for paragraphs (1) to (3), the following provision shall have effect—

“(1) For the purposes of regulation 11 (calculation of earnings of self-employed earners), the earnings of a claimant to be taken into account shall be—

(a)in the case of a self-employed earner who is engaged in employment on his own account, the net profit derived from that employment;

(b)in the case of a self-employed earner whose employment is carried on in partnership, his share of the net profit derived from that employment less—

(i)an amount in respect of income tax and of social security contributions payable under the Contributions and Benefits Act calculated in accordance with regulation 14 (deduction of tax and contributions for self-employed earners); and

(ii)one half of any premium paid in the period that is relevant under regulation 11 in respect of a retirement annuity contract or a personal pension scheme.”

(b)paragraphs (4) to (12) shall have effect.

(6) Regulation 14 (deduction of tax and contributions for self-employed earners) shall have effect.]

Textual Amendments

Notional income

18.—[F84(1) A claimant who has attained the qualifying age shall be treated as possessing the amount of any retirement pension income—

(a)to which section 16(1)[F85(za)] to (e) applies,

(b)for which no claim has been made, and

(c)to which the claimant might expect to be entitled if a claim for it were made,

but only from the date on which that income could be expected to be acquired if a claim for it were made.]

[F86(1A) Paragraph (1) is subject to paragraphs (1B) [F87(1CA)][F88, (1CB) and (5A)].]

[F89(1B) Where a claimant—

(a)has deferred entitlement to retirement pension income to which section 16(1)(a) to (c) applies for at least 12 months, and

(b)would have been entitled to make an election under Schedule 5 or 5A to the 1992 Act or under Schedule 1 to the Graduated Retirement Benefit Regulations,

he shall be treated for the purposes of paragraph (1) as possessing the amount of retirement pension income to which he might expect to be entitled if he were to elect to receive a lump sum.]

[F90(1C) Paragraphs (1CA) and (1CB) apply for the purposes of paragraph (1) (or, where applicable, paragraph (1) read with paragraph (1B)).

(1CA) Where a benefit or allowance in payment in respect of the claimant would be adjusted under the Social Security (Overlapping Benefits) Regulations 1979 [F91or regulation 16(2) of the Carer’s Assistance (Carer Support Payment) (Scotland) Regulations 2023] if the retirement pension income had been claimed, he shall be treated as possessing that income minus the benefit or allowance in payment.

(1CB) Where a benefit or allowance in payment in respect of the claimant would require an adjustment to be made under the Social Security (Overlapping Benefits) Regulations 1979 to the amount of retirement pension income payable had it been claimed, he shall be treated as possessing that retirement pension income minus the adjustment which would be made to it.]

[F92(1D) [F93Subject to paragraph (5A),] a claimant who has attained the qualifying age shall be treated as possessing income from an occupational pension scheme which he elected to defer, but only from the date on which it could be expected to be acquired if a claim for it were made.]

(2) [F94Subject to paragraph (5A),] where a person, [F95who has attained the qualifying age], is a person entitled to money purchase benefits under an occupational pension scheme or a personal pension scheme, or is a party to, or a person deriving entitlement to a pension under, a retirement annuity contract, and—

(a)he fails to purchase an annuity with the funds available in that scheme where—

(i)he defers, in whole or in part, the payment of any income which would have been payable to him by his pension fund holder;

(ii)he fails to take any necessary action to secure that the whole of any income which would be payable to him by his pension fund holder upon his applying for it, is so paid; or

(iii)income withdrawal is not available to him under that scheme; or

(b)in the case of a retirement annuity contract, he fails to purchase an annuity with the funds available under that contract,

the amount of any income foregone shall be treated as possessed by him, but only from the date on which it could be expected to be acquired were an application for it to be made.

(3) The amount of any income foregone in a case to which either head (i) or (ii) of paragraph (2)(a) applies shall be the [F96rate of the annuity which may have been purchased with the fund and is to be determined by the Secretary of State, taking account of information provided by the pension fund holder in accordance with regulation 7(5) of the Social Security (Claims and Payments) Regulations 1987].

(4) The amount of any income foregone in a case to which either head (iii) of paragraph (2)(a) or paragraph (2)(b) applies shall be the income that the claimant could have received without purchasing an annuity had the funds held under the relevant scheme or retirement annuity contract been held under a personal pension scheme or occupational pension scheme where income withdrawal was available and shall be determined in the manner specified in paragraph (3).

(5) In paragraph (2), “money purchase benefits” has the meaning it has in the Pensions Scheme Act 1993M12.

[F97(5A) Where a person—

(a)makes a claim for state pension credit on or after the issue of a tax credit closure notice and before the expiry of one month beginning with the deadline day specified in that notice; and

(b)has not, at the time the notice is issued, made an application for retirement pension income to which they might expect to be entitled,

paragraphs (1), (1D) and (2) are not to apply for a period beginning with the first day on which the person is entitled to an award of state pension credit as a consequence of that claim and ending after 52 weeks or, if sooner, on the day the person ceases to be entitled to state pension credit.]

(6) [F98Subject to [F99the following paragraphs],] a person shall be treated as possessing income of which he has deprived himself for the purpose of securing entitlement to state pension credit or increasing the amount of that benefit.

[F100(7) Paragraph (6) shall not apply in respect of the amount of an increase of pension or benefit where a person, having made an election in favour of that increase of pension or benefit under Schedule 5 or 5A to the 1992 Act or under Schedule 1 to the Graduated Retirement Benefit Regulations, changes that election in accordance with regulations made under Schedule 5 or 5A to that Act in favour of a lump sum.]

[F101(7ZA) Paragraph (6) shall not apply in respect of the amount of an increase of pension where a person, having made a choice in favour of that increase of pension under section 8(2) of the Pensions Act 2014, alters that choice in favour of a lump sum, in accordance with Regulations made under section 8(7) of that Act.

(7ZB) Paragraph (6) shall not apply in respect of the amount of an increase of pension where a person, having made a choice in favour of that increase of pension in accordance with Regulations made under section 10 of the Pensions Act 2014 which include provision corresponding or similar to section 8(2) of that Act, alters that choice in favour of a lump sum, in accordance with Regulations made under section 10 of that Act which include provision corresponding or similar to Regulations made under section 8(7).]

[F102(7A) Paragraph (6) shall not apply in respect of any amount of income other than earnings, or earnings of an employed earner, arising out of the [F103claimant participating as a service user].]

[F100(8) In paragraph (7), “lump sum” means a lump sum under Schedule 5 or 5A to the 1992 Act or under Schedule 1 to the Graduated Retirement Benefit Regulations.]

[F104(8A) In paragraph (7ZA), “lump sum” means a lump sum under section 8 of the Pensions Act 2014.

(8B) In paragraph (7ZB), “lump sum” means a lump sum under Regulations made under section 10 of the Pensions Act 2014.]

[F105(9) For the purposes of paragraph (6), a person is not to be regarded as depriving himself of income where—

(a)his rights to benefits under a registered pension scheme are extinguished and in consequence of this he receives a payment from the scheme, and

(b)that payment is a trivial commutation lump sum within the meaning given by paragraph 7 of Schedule 29 to the Finance Act 2004.

(10) In paragraph (9), ”registered pension scheme” has the meaning given in section 150(2) of the Finance Act 2004.]

Textual Amendments

F85Word in reg. 18(1)(a) substituted (coming into force in accordance with art. 1(2)(b) of the amending S.I.) by The Pensions Act 2014 (Consequential, Supplementary and Incidental Amendments) Order 2015 (S.I. 2015/1985), arts. 1(2)(b), 24(2)(a)

F99Words in reg. 18(6) substituted (for specified purposes and with effect in accordance with reg. 1(2) of the amending S.I.) by The Social Security (Miscellaneous Amendments) (No. 4) Regulations 2009 (S.I. 2009/2655), regs. 1(2)(c), 5(4)(a)

F101Reg. 18(7ZA)(7ZB) inserted (coming into force in accordance with art. 1(2)(b) of the amending S.I.) by The Pensions Act 2014 (Consequential, Supplementary and Incidental Amendments) Order 2015 (S.I. 2015/1985), arts. 1(2)(b), 24(2)(b)

F102Reg. 18(7A) added (for specified purposes and with effect in accordance with reg. 1(2) of the amending S.I.) by The Social Security (Miscellaneous Amendments) (No. 4) Regulations 2009 (S.I. 2009/2655), regs. 1(2)(c), 5(4)(b)

F104Reg. 18(8A)(8B) inserted (coming into force in accordance with art. 1(2)(b) of the amending S.I.) by The Pensions Act 2014 (Consequential, Supplementary and Incidental Amendments) Order 2015 (S.I. 2015/1985), arts. 1(2)(b), 24(2)(c)

Marginal Citations

M121993 c. 48;see section 181(1) of that Act.

[F106 Calculation of capital in the United Kingdom

19.  Capital which a claimant possesses in the United Kingdom shall be calculated at its current market or surrender value less—

(a)where there would be expenses attributable to sale, 10 per cent; and

(b)the amount of any encumbrance secured on it.]

Textual Amendments

Calculation of capital outside the United Kingdom

20.  Capital which a claimant possesses in a country outside the United Kingdom shall be calculated—

(a)in a case where there is no prohibition in that country against the transfer to the United Kingdom of an amount equal to its current market or surrender value in that country, at that value;

(b)in a case where there is such a prohibition, at the price which it would realise if sold in the United Kingdom to a willing buyer,

less, where there would be expenses attributable to sale, 10 per cent., and the amount of any encumbrance secured on it.

Notional capital

21.—[F107(1) A claimant shall be treated as possessing capital of which he has deprived himself for the purpose of securing entitlement to state pension credit or increasing the amount of that benefit except to the extent that the capital which he is treated as possessing is reduced in accordance with regulation 22 (diminishing notional capital rule).]

[F108(2) A person who disposes of a capital resource for the purpose of—

(a)reducing or paying a debt owed by the claimant; or

(b)purchasing goods or services if the expenditure was reasonable in the circumstances of the claimant’s case,

shall be regarded as not depriving himself of it.]

[F109(3) Where a claimant stands in relation to a company in a position analogous to that of a sole owner or partner in the business of that company, he shall be treated as if he were such sole owner or partner and in such a case—

(a)the value of his holding in that company shall, notwithstanding regulation 19 (calculation of capital), be disregarded; and

(b)he shall, subject to paragraph (4), be treated as possessing an amount of capital equal to the value or, as the case may be, his share of the value of the capital of that company and the foregoing provisions of this Chapter shall apply for the purposes of calculating that amount as if it were actual capital which he does possess.

(4) For so long as a claimant undertakes activities in the course of the business of the company, the amount which he is treated as possessing under paragraph (3) shall be disregarded.

(5) Where under this regulation a person is treated as possessing capital, the amount of that capital shall be calculated in accordance with the provisions of this Part as if it were actual capital which he does possess.]

Textual Amendments

Diminishing notional capital rule

22.—(1) Where a claimant is treated as possessing capital under regulation 21(1) (notional capital), the amount which he is treated as possessing—

(a)in the case of a week that is subsequent to—

(i)the relevant week in respect of which the conditions set out in paragraph (2) are satisfied, or

(ii)a week which follows that relevant week and which satisfies those conditions,

shall be reduced by an amount determined under paragraph (2);

(b)in the case of a week in respect of which sub-paragraph (1)(a) does not apply but where—

(i)that week is a week subsequent to the relevant week, and

(ii)that relevant week is a week in which the condition in paragraph (3) is satisfied,

shall be reduced by the amount determined under paragraph (3).

(2) This paragraph applies to a benefit week where the claimant satisfies the conditions that—

(a)he is in receipt of state pension credit; and

(b)but for regulation [F11021(1)], he would have received an additional amount of state pension credit in that benefit week;

and in such a case, the amount of the reduction for the purposes of paragraph (1)(a) shall be equal to that additional amount.

(3) Subject to paragraph (4), for the purposes of paragraph (1)(b) the condition is that the claimant would have been entitled to state pension credit in the relevant week, but for regulation [F11021(1)], and in such a case the amount of the reduction shall be equal to the aggregate of—

(a)the amount of state pension credit to which the claimant would have been entitled in the relevant week but for regulation [F11021(1)];

(b)the amount of housing benefit (if any) equal to the difference between his maximum housing benefit and the amount (if any) of housing benefit which he is awarded in respect of the benefit week, within the meaning of regulation 2(1) of the Housing Benefit (General) Regulations 1987 M13 (interpretation), which includes the last day of the relevant week;

(c)the amount of council tax benefit (if any) equal to the difference between his maximum council tax benefit and the amount (if any) of council tax benefit which he is awarded in respect of the benefit week which includes the last day of the relevant week, and for this purpose “benefit week” [F111means a period of 7 consecutive days beginning on a Monday and ending on a Sunday].

(4) The amount determined under paragraph (3) shall be re-determined under that paragraph if the claimant makes a further claim for state pension credit and the conditions in paragraph (5) are satisfied, and in such a case—

(a)sub-paragraphs (a) to (c) of paragraph (3) shall apply as if for the words “relevant week” there were substituted the words “ relevant subsequent week ”; and

(b)subject to paragraph (6), the amount as re-determined shall have effect from the first week following the relevant subsequent week in question.

(5) The conditions are that—

(a)a further claim is made 26 or more weeks after—

(i)the date on which the claimant made a claim for state pension credit in respect of which he was first treated as possessing the capital in question under regulation [F11021(1)]; or

(ii)in a case where there has been at least one re-determination in accordance with paragraph (4), the date on which he last made a claim for state pension credit which resulted in the weekly amount being re-determined; or

(iii)the date on which he last ceased to be in receipt of state pension credit,

whichever last occurred; and

(b)the claimant would have been entitled to state pension credit but for regulation [F11021(1)].

(6) The amount as re-determined pursuant to paragraph (4) shall not have effect if it is less than the amount which applied in that case immediately before the re-determination and in such a case the higher amount shall continue to have effect.

(7) For the purpose of this regulation—

(a)“relevant week” means the benefit week in which the capital in question of which the claimant has deprived himself within the meaning of regulation [F11021(1)]—

(i)was first taken into account for the purpose of determining his entitlement to state pension credit; or

(ii)was taken into account on a subsequent occasion for the purpose of determining or re-determining his entitlement to state pension credit on that subsequent occasion and that determination or re-determination resulted in his beginning to receive, or ceasing to receive, state pension credit;

and where more than one benefit week is identified by reference to heads (i) and (ii) of this sub-paragraph the later or latest such benefit week;

(b)“relevant subsequent week” means the benefit week which includes the day on which the further claim or, if more than one further claim had been made, the last such claim was made.

Textual Amendments

Marginal Citations

Capital jointly held

23.  Where a claimant and one or more persons are beneficially entitled in possession to any capital asset they shall be treated as if each of them were entitled in possession to the whole beneficial interest therein in an equal share and the foregoing provisions of this Part shall apply for the purposes of calculating the amount of capital which the claimant is treated as possessing as if it were actual capital which the claimant does possess.

Income paid to third parties

24.—(1) Any payment of income, other than a payment specified in [F112paragraphs (2) or (3)], to a third party in respect of the claimant shall be treated as possessed by the claimant.

(2) Paragraph (1) shall not apply in respect of a payment of income made under an occupational pension scheme or in respect of a pension or other periodical payment made under a personal pension scheme where—

(a)a bankruptcy order has been made in respect of the person in respect of whom the payment has been made or, to Scotland, the estate of that person is subject to sequestration or a judicial factor has been appointed on that person’s estate under section 41 of the Solicitors (Scotland) Act 1980 M14;

(b)the payment is made to the trustee in bankruptcy or any other person acting on behalf of the creditors; and

(c)the person referred to in sub-paragraph (a) and his partner does not possess, or is not treated as possessing, any other income apart from that payment.

[F113(3) Paragraph (1) shall not apply in respect of any payment of income arising out of the [F114claimant participating as a service user].]

Textual Amendments

Marginal Citations

[F115Rounding of fractions

24A.  Where any calculation under this Part results in a fraction of a penny that fraction shall, if it would be to the claimant’s advantage, be treated as a penny; otherwise it shall be disregarded.]

Textual Amendments

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