PART 2Determinations in respect of an individual's financial resources

CHAPTER 3Calculation of income

Calculation of income21

The income of the individual must be taken to be—

a

the gross amount the individual has earned or will earn;

b

the gross amount of any entitlements that have accrued, or will accrue, to the individual; and

c

any other gross sums from any source which the individual has received, or is likely to receive,

in cash or in kind, during the period of calculation (referred to in regulation 14(2) and (3)), but in calculating such income the Director may have regard to the average income of the individual during such other period as the Director considers appropriate.

Calculation of income from trade, business or gainful employment22

1

The income from a trade, business or gainful occupation other than an occupation at a wage or salary must be deemed to be whichever of the following the Director considers more appropriate and practicable—

a

the profits which have accrued or will accrue to the individual in respect of the period of calculation; or

b

the drawings of the individual.

2

In calculating the profits under paragraph (1)(a)—

a

the Director may have regard to the profits of the last accounting period of such trade, business or gainful occupation for which accounts have been prepared; and

b

there must be deducted all sums necessarily expended to earn those profits, but no deduction may be made in respect of the living expenses of the individual or any member of their family or household, except in so far as such member of their family or household is wholly or mainly employed in such trade or business and such living expenses form part of that member's remuneration.

Deductions for income tax and national insurance contributions23

1

For the purposes of this regulation, “national insurance contributions” means contributions under Part 1 of the Social Security Contributions and Benefits Act 1992 M1.

2

Subject to paragraph (3), in calculating the disposable income of the individual, any income tax and national insurance contribution paid on that income in respect of the period of calculation must be deducted.

3

Where an application is made for family help (higher) or legal representation, in calculating the disposable income of the individual any income tax and national insurance contribution payable on that income in respect of the period of calculation must be deducted.

Payments to be disregarded from calculation of disposable income or gross income24

1

In calculating the disposable income or the gross income of the individual, the following payments must be disregarded—

a

disability living allowance paid under section 71 of the Social Security Contributions and Benefits Act 1992 M2 or section 71 of the Social Security Contributions and Benefits (Northern Ireland) Act 1992 M3;

b

attendance allowance paid under section 64 of the Social Security Contributions and Benefits Act 1992 or section 64 of the Social Security Contributions and Benefits (Northern Ireland) Act 1992;

c

constant attendance allowance paid under section 104 of the Social Security Contributions and Benefits Act 1992 as an increase to a disablement pension or section 104 of the Social Security Contributions and Benefits (Northern Ireland) Act 1992;

d

any payment made out of the social fund under the Social Security Contributions and Benefits Act 1992 or the Social Security Contributions and Benefits (Northern Ireland) Act 1992;

e

carer's allowance paid under section 70 of the Social Security Contributions and Benefits Act 1992 M4 or section 70 of the Social Security Contributions and Benefits (Northern Ireland) Act 1992 M5;

f

council tax benefit paid under section 131 of the Social Security Contributions and Benefits Act 1992 M6;

g

any direct payments made under F4sections 31 to 33 of the Care Act 2014 (direct payments) or under regulations made under F5section 49(3) of the Children and Families Act 2014 (personal budgets and direct payments), section 57(1) of the Health and Social Care Act 2001 M7 (direct payments), section 17A of the Children Act 1989 M8 (direct payments) F6, section 8(1) of the Carers and Direct Payments Act (Northern Ireland) 2002M9F7or sections 50 to 53 of the Social Services and Well-being (Wales) Act 2014;

h

so much of any back to work bonus received under section 26 of the Jobseekers Act 1995 M10 as is by virtue of that section to be treated as payable by way of jobseeker's allowance;

i

severe disablement allowance paid under section 68 of the Social Security Contributions and Benefits Act 1992 M11 or section 68 of the Social Security Contributions and Benefits (Northern Ireland) Act 1992 M12;

j

exceptionally severe disablement allowance paid under the Personal Injuries (Civilians) Scheme 1983 M13;

k

any pensions paid under the Naval, Military and Air Forces Etc. (Disablement and Death) Service Pensions Order 2006 M14;

l

to the extent that it exceeds the relevant figure referred to in regulation 25(2)(b), any financial support paid under any agreement for the care of a foster child;

m

any payment made out of the Independent Living Fund 2006 F8or by or under the Welsh Independent Living Grant; F1...

n

any personal independence payment under Part 4 of the Welfare Reform Act 2012 M15F9or Part 5 of the 2015 (Northern Ireland) OrderF2;

o

any armed forces independence payment payable under the Armed Forces and Reserve Forces (Compensation Scheme) Order 2011;

F10p

payments made under Part 2 or 3 of the 2013 Regulations or Part 2 or 3 of the 2016 (Northern Ireland) Regulations; F15...

q

payments made under regulation 17 of the Universal Credit (Transitional Provisions) Regulations 2014 or regulation 17 of the Universal Credit (Transitional Provisions) Regulations (Northern Ireland) 2016;

F12r

any payment made under the Windrush Compensation Scheme; F16...

s

any Windrush connected payment.

F17t

any payment made by or under the Macfarlane Trust, the Macfarlane (Special Payments) Trust, the Macfarlane (Special Payments) (No.2) Trust, the Eileen Trust, MFET Limited, the Skipton Fund, the Caxton Foundation or a Relevant Infected Blood Support Scheme;

u

any payment made under the Vaccine Damage Payments Act 1979; F18...

v

any payment made by or under a trust established out of funds provided by the Secretary of State in respect of persons who suffered, or who are suffering, from variant Creutzfeldt-Jakob disease for the benefit of persons eligible for payments in accordance with its provisionsF19;

w

a payment made under the Social Security (Additional Payments) Act 2022;

x

a payment made to an individual under section 13 or 15 of the Energy Prices Act 2022

F132

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

F113

In calculating the disposable income or the gross income of the individual, the Director may disregard any payment that meets all of the following conditions—

a

the payment was made to an individual who is a victim of the fire at Grenfell Tower;

b

the payment was made to that individual because the individual is a victim of the fire at Grenfell Tower, and

c

the payment was not made directly to the individual by an individual known personally to the individual.

F143A

In calculating the disposable income or the gross income of the individual, the Director may disregard the following payments—

a

any payment made by or under the National Emergencies Trust, the We Love Manchester Emergency Fund, or the London Emergencies Trust; and

b

any award of compensation paid under a Criminal Injuries Compensation Scheme.

4

In this regulation—

  • “fire at Grenfell Tower” means the fire at Grenfell Tower on 14th June 2017;

  • “Grenfell Tower” means Grenfell Tower, Grenfell Road, London, W11 1TG;

  • “victim of the fire at Grenfell Tower” means an individual who is any one or more of the following—

    1. a

      an individual living in Grenfell Tower on 14th June 2017;

    2. b

      an individual present in Grenfell Tower on 14th June 2017 at the time of the fire at Grenfell Tower;

    3. c

      an individual who was injured in, or as a result of, the fire at Grenfell Tower;

    4. d

      an individual living in a building in the immediate vicinity of Grenfell Tower that was evacuated as a result of the fire at Grenfell Tower;

    5. e

      a member of the family of an individual who died in the fire at Grenfell Tower or is missing in the fire at Grenfell Tower (and an individual is a member of the family of such an individual if the requirements of section 10(6) of the Act are met), or

    6. f

      a personal representative of an individual who died in the fire at Grenfell Tower.

Deductions in respect of a partner and dependants of the individualC125

1

For the purposes of this regulation, “the Schedule” means Schedule 2 to the Income Support (General) Regulations 1987 M16.

2

Subject to paragraph (3), in calculating the disposable income of the individual there must be a deduction at or equivalent to the following rates (as they applied at the beginning of the period of calculation)—

a

in respect of the maintenance of the individual's partner, the difference between the income support allowance for a couple both aged not less than 18 (which is specified in column 2 of item (3)(d) of the table in paragraph 1 of the Schedule), and the allowance for a single person aged not less than 25 (which is specified in column 2 of item (1)(e) of the table in paragraph 1 of the Schedule); and

b

in respect of the maintenance of any dependent child or dependent relative of the individual, where such persons are members of the individual's household—

i

in the case of a dependent child or a dependent relative aged 15 or under at the beginning of the period of calculation, the amount specified at (a) in column 2 in the table in paragraph 2 of the Schedule; and

ii

in the case of a dependent child or a dependent relative aged 16 or over at the beginning of the period of calculation, the amount specified at (b) in column 2 in the table in paragraph 2 of the Schedule.

3

The Director may reduce any rate provided by virtue of paragraph (2) by taking into account the income and other resources of the dependent child or dependent relative to such extent as appears to the Director to be equitable.

4

In ascertaining whether a child is a dependent child or whether a person is a dependent relative for the purposes of this regulation, regard must be had to their income and other resources.

Deduction in respect of maintenance26

Where the individual is making and, throughout such period as the Director considers adequate, has regularly made payments for the maintenance of—

a

a former partner;

b

a child; or

c

a relative,

who is not a member of the individual's household, a reasonable amount must be deducted in respect of such payments.

Deductions in respect of employment expenses and child care costs27

1

Where the income of the individual consists, wholly or partly, of a wage or salary from employment, there must be deducted—

a

the sum of £45 per month; and

b

where it would be reasonable to do so, an amount to provide for the care of any dependent child living with the individual during the time that individual is absent from home by reason of their employment.

2

Where the income of the individual consists, wholly or partly, of income from a trade, business or gainful occupation other than an occupation at a wage or salary, there must be deducted, where it would be reasonable to do so, an amount to provide for the care of any dependent child living with the individual during the time that individual is absent from home whilst the individual is engaged in that trade, business or gainful occupation.

F33

Where the income of the individual consists, wholly or partly, of study-related income, there must be deducted, where it would be reasonable to do so, an amount to provide for the care of any dependent child living with the individual during the time that individual is absent from home by reason of their course of study.

4

In this regulation, the “study-related income” of an individual means income consisting of a—

a

student loan;

b

student grant; or

c

other income received from a person who is not a partner or relative of the individual,

and the purpose of the income is to support the individual’s course of study.

Deductions in respect of rent or cost of living accommodation28

1

Paragraphs (2) to (5) apply only if the individual is a householder.

2

Subject to paragraph (4), in calculating the disposable income of the individual—

a

the net rent payable by the individual in respect of their main or only dwelling must be deducted; and

b

where the individual resides in more than one dwelling, the Director must decide which is the main dwelling.

3

In calculating the amount of net rent payable, there must be deducted—

a

any housing benefit paid under section 130 of the Social Security Contributions and Benefits Act 1992 M17 or section 129 of the Social Security Contributions and Benefits (Northern Ireland) Act 1992;

b

any proceeds of sub-letting any part of the premises; and

c

an amount reasonably attributable to any person other than the individual, their partner or any dependant of the individual, who is accommodated in the premises otherwise than as a sub-tenant.

4

Where the amount of net rent paid by the individual is less than the amount of net rent payable, the Director may deduct the lesser amount where the Director considers it is reasonable to do so in the circumstances, having regard to—

a

the likelihood that the individual will recommence payment of the full contractual amount in the future;

b

the relationship of the individual with the landlord; and

c

any agreement with the landlord or mortgagee for payment deferral.

5

Paragraph (4) does not apply where the individual makes an application in respect of a matter described in paragraph 33 (loss of home) of Part 1 of Schedule 1, to the extent that—

a

the matter concerns possession of the individual's home; and

b

the individual is resisting a court order for such possession.

6

If the individual is not a householder, a reasonable amount in respect of the cost of their living accommodation must be deducted.

7

If no deduction has been made under regulation 25(2), the maximum amount to be deducted under paragraph (2) or (4) or, as the case may be, (6), must be £545.

8

In this regulation—

  • “householder”, in relation to domestic premises, means a person who—

    1. a

      owns the dwelling (as a freeholder or leaseholder); or

    2. b

      rents accommodation at that address (as a tenant or sub-tenant); and

  • “net rent” means—

    1. a

      any monthly rent; and

    2. b

      any monthly instalment (whether of interest or capital) in respect of a debt secured by a mortgage or charge on the property.

Annotations:
Marginal Citations
M17

1992 c. 4. Section 130 is to be repealed by Part 1 of Schedule 14 to the Welfare Reform Act 2012 at a date to be appointed.

Deductions in respect of contribution orders29

In calculating the disposable income of the individual, any amounts due under a contribution order made under the Criminal Legal Aid (Contribution Orders) Regulations 2013 M18 must be deducted.