Notional earningsE+W+S
63.—(1) Subject to paragraph (2), any earnings which are due to be paid to the claimant but have not been paid to the claimant, are to be treated as possessed by the claimant.
(2) Paragraph (1) does not apply to any earnings which are due to an employed earner on the termination of their employment by reason of redundancy but which have not been paid to them.
(3) Where a claimant's earnings are not ascertainable at the time of the determination of the claim or of any revision or supersession, the Secretary of State must treat the claimant as possessing such earnings as is reasonable in the circumstances of the case having regard to the number of hours worked and the earnings paid for comparable employment in the area.
(4) Subject to paragraph (5), where—
(a)a claimant performs a service for another person; and
(b)that person makes no payment of earnings or pays less than that paid for a comparable employment in the area,
the Secretary of State must treat the claimant as possessing such earnings (if any) as is reasonable for that employment unless the claimant satisfies the Secretary of State that the means of that person are insufficient for that person to pay or to pay more for the service.
(5) Paragraph (4) does not apply—
(a)to a claimant who is engaged by a charity or voluntary organisation or who is a volunteer if the Secretary of State is satisfied in any of those cases that it is reasonable for the claimant to provide those services free of charge;
(b)to a claimant who is participating in a work placement approved by the Secretary of State (or a person providing services to the Secretary of State) before the placement starts.
(6) Where a claimant is treated as possessing any earnings under paragraphs (1) or (2), regulations 54 to 62 apply for the purposes of calculating the amount of those earnings as if a payment had actually been made and as if it were actual earnings which the claimant does possess.
(7) Where a claimant is treated as possessing any earnings under paragraphs (3) or (4), regulations 54 to 62 apply for the purposes of calculating the amount of those earnings as if a payment had actually been made and as if they were actual earnings which the claimant does possess, except that—
(a)regulation 59(3) does not apply; and
(b)the claimant's net earnings are to be calculated by taking into account the earnings which the claimant is treated as possessing less the amounts referred to in paragraph (8).
(8) The amounts mentioned in paragraph (7)(b) are—
(a)where the period over which the earnings which the claimant is treated as possessing are to be taken into account is—
(i)a year or more, an amount in respect of income tax equivalent to an amount calculated in accordance with paragraph (11);
(ii)less than a year, the earnings to which the starting rate of tax is to be applied and the amount of the personal allowance deductible under this paragraph are to be calculated on a pro rata basis;
(b)where the weekly amount of the earnings which the claimant is treated as possessing is not less than the lower earnings limit, an amount representing primary Class 1 contributions under the Benefits Act, calculated by applying to those earnings the initial and main primary percentages in accordance with section 8(1)(a) and (b) of that Act M1; and
(c)half of any sum payable by the claimant in respect of a pay period by way of a contribution towards an occupational or personal pension scheme.
(9) Paragraphs (1), (3) and (4) do not apply in respect of any amount of earnings derived from employment as an employed earner, arising out of the claimant's participation as a service user.
(10) In this regulation, “work placement” means practical work experience which is not undertaken in expectation of payment.
(11) For the purposes of paragraph (8)(a)(i), the amount is calculated by applying to those earnings—
(a)the starting rate of tax in the year of assessment; or as the case may be
(b)the starting rate and the basic rate of tax in the year of assessment,
less only the personal allowance to which the claimant is entitled under sections 35 and 38 to 40 of the Income Tax Act 2007 (personal reliefs) as is appropriate to the claimant's circumstances.
Marginal Citations
M1Section 8 was substituted by section 1 of the National Insurance Contributions Act 2002 (c.19).