| Circular SWSG13/93 - Community Care:
National Assistance (Assessment of Resources) (Amendment) Regulations 1993, Guidance on
Charging - Amendment 1
SECTION 8 - INCOME OTHER THAN EARNINGS
General
What is income?
8.001 A resident’s resources are either capital or
income. It may not always be obvious whether a payment should be treated as capital or
income, but generally, a payment of income is one which:
a) is made in respect of a period; and
b) forms part of a series of payments (whether or not
payments are received regularly)
8.002 A payment of income is taken into account for a
period equivalent to that which it represents, eg a payment due to be made weekly is taken
into account for a month, but a weekly rate is calculated before assessment. Guidance on
the attribution of income to a specific period is in Section 9.
Treatment of income
8.003 Income is treated in one of three ways:
a) taken into account in full;
b) partly disregarded; or
c) fully disregarded.
8.004 Paragraphs 8.005 and 9.058 below list the types of
income in each category, and provide further details where necessary.
Income taken fully into account
8.005 The following types of income are taken into account
in full:
• Most Social Security Benefits (8.006)
• Annuity Income (except home income plans) (8.013)
• Cash in lieu of concessionary coal
• Child Support Maintenance payments where the child
is accommodated with the resident under Part III of the National Assistance Act 1948 (see
8.038 for other cases)
• Home Office ex gratia incapacity allowances
• Income from certain disregarded capital (8.015)
• Income from and insurance policy (except mortgage
protection insurance) (8.016)
• Income from certain sub-let (8.017)
• Occupational Pensions
• Refund of Income tax
• Third party payments made under an agreement to meet
excess fees (8.018)
• Trust income (see Section 10)
• War Orphan’s pension
Reg 15(1)
Social Security benefits
8.006 The Social Security benefits to be taken fully into
account are:
Attendance Allowance (AA)/Disability Living Allowance (DLA)
(Care Component) (this also includes any Constant Attendance Allowance (CAA) and
Exceptionally Severe Disablement Allowance (ESDA) payable with Industrial Injuries
Disablement Benefit or War Disablement Benefit) paid to permanent resident see
3.014 for treatment of AA/DLA (Care) paid to temporary residents.
• Child Benefit and One Parent Benefit
• Disability Working Allowance
• Family Credit
• Guardians Allowance
• Housing Benefit - where the resident has been
admitted permanently into unregistered accommodation or local authority accommodation not
providing board so Housing Benefit is being paid to meet the accommodation charge.
• Income Support (but see paragraph 8.043 for
exception)
• Industrial Death Benefit
• Industrial Injuries Disablement Benefit (IIDB)
(8.008) - see also above and 3.014 for treatment of CAA paid with IIDB
• Invalidity Benefit
• Invalid Care Allowance
• Maternity Allowance
• Pneumoconiosis, byssinosis and miscellaneous
diseases benefit scheme payments (8.009) - see also above and 3.014 for CAA and ESDA paid
with these payments
• Retirement Pension 8.010
• Severe Disablement Allowance
• Sickness Benefit
• Unemployment Benefit
• Widow’s benefit widow’s pension (WP) and
widowed mother’s allowance (WMA) (8.011). See Section 6 (Capital) for treatment of
widow’s payment (WPT)
• Workmen’s compensation (8.012) - see also above
and 3.014 for treatment of AA/CAA paid under the Workmen’s Compensation Act
Reg 15(1)
Deductions from benefits
8.007 Where any Social Security benefit is being subjected
to a reduction (other than a reduction because of voluntary unemployment) eg because of an
earlier overpayment, the amount to be taken into account should be the gross amount of
benefit before reduction
Reg 15(3)
Industrial Injuries Disablement Benefit (IIDB)
8.008 Industrial Injuries Disablement Benefit is taken
fully into account. However, some additional allowances may be paid with IIDB. These are:
a) ESDA (Exceptionally Severe Disablement Allowance);
b) CAA (Constant Attendance Allowance); and
c) REA (Reduced Earnings Allowance)
ESDA and CAA are fully disregarded (see 3.013). REA is
taken fully into account.
Pneumoconiosis, byssinosis and miscellaneous diseases
benefit scheme
8.009 These payments are made to people who are not
entitled to workmen’s compensation (8.012) or IIDB (8.008). They are taken fully into
account. AA may be paid with these payments - see 3.014.
Retirement Pension
8.010 Retirement Pension may include various addictions and
increases, all of which are to be taken into account in full. AA may be paid with RP see
3.014 and 8.006 for treatment of AA.
Widow’s benefit (Widow’s Pension (WP) and Widowed
Mother’s Allowance (WMA))
8.011 A widow may be entitled to WP or WMA. Both are taken
fully into account. Widow’s Payment (WPT) may be paid in addition to WP or WMA. WPT
is paid as a lump sum and is treated as capital.
Workmen’s compensation
8.012 These payments are awarded for industrial injuries
and diseases resulting from employment before the IIDB scheme started. AA may be paid with
workmen’s compensation - see 3.014 and 8.006 for treatment of AA.
Annuity Income
8.013 An annuity is a fixed sum payable at specified
intervals (normally annually), in return for a premium payable either in instalments or as
a single payment. The annuity income is payable for a specified period, such as the
recipient’s lifetime.
8.014 Income from an annuity is to be taken fully into
account except when the annuity is:
a) purchased with a loan secured on the resident’s
dwelling (partial disregard - see paragraphs 8.025 to 8.030);
b) a gallantry award eg Victoria Cross Annuity, George
Cross Annuity (fully disregarded - see paragraph 8.043); or
c) purchased by a charity or by a relative to provide an
income for the resident (treated as a charitable payment - see paragraphs 8.051 to 8.057).
Income from certain disregarded capital
8.015 Income from capital will generally not be treated as
income (see 6.041). However, income which comes from certain forms of disregarded capital
is taken fully into account as income for as long as the capital is disregarded. This will
be the case where the capital is:
•the normal dwelling of a temporary resident (but see
3.011 for disregard of income needed to cover housing commitments)
• business assets which the resident is taking steps
to dispose of
• any capital held in trust which is a result of a
personal injury
• a dwelling which the resident intends to occupy as
his home and which he is taking steps to occupy
• the former dwelling of the resident which is
occupied by a partner or a relative of the resident who is over age 60, under 16 and whom
the resident is liable to maintain, or incapacitated
• any premises which the resident intends to occupy as
his home and in respect of which he is taking legal steps to obtain possession
• any premises which the resident intends to occupy as
his home but which needs repairs or alterations in order for the resident to occupy
However, in the final four situations, only income which
cover the mortgage repayments, payments for water rates and council take may be
disregarded - see paragraph 8.037.
Schedule 3 para 14
Income from insurance policies
8.016 Any form of income from an insurance policy is
generally taken into account in full. The only exception is income from a mortgage
protection policy (paragraph 8.033).
Income from certain sub-lets
8.017 When a resident sub-lets part of their property which
is not part of the living accommodation, for example the garage or the garden, the income
from that sub-let is taken fully into account. The treatment of income from other sub-lets
is described in paragraph 8.031.
Third party payments made to meet higher fees
8.018 Where a local authority agrees to place a resident in
a higher price home on the grounds that there is a third party willing to contribute
towards the higher fee, the payments made by the third party should be treated as the
resident’s income and should be taken into account in full.
8.019 Other payments made by a third party should be
treated in accordance with paragraphs 8.051 to 8.057.
Trust income
8.020 See Section 10.
Income partly disregarded
£10 disregarded
8.021 The following types of income attract a £10
disregard:
• Certain charitable and voluntary payments (8.051 -
8.057)
• Payments to victims of National Socialist
persecution (paid under German or Austrian Law)
Schedule 3 para 11
• Civilian war injury pension
Schedule 3 para 11
• War disablement pension (8.026) - see also 3.014 and
8.006 for treatment of AA/CAA paid with WDP
• War widow’s pension - but see 8.046 for War
widow’s Special Payments.
Overall Disregard
8.022 Where more than one payment qualifies for a £10
disregard, the amount disregarded overall is £10. The only exception is where 2 or more
payments, which were due to be paid and therefore taken into account in different weeks,
are in fact taken into account in the same week because it was not practical to take them
into account for the weeks in which they were due to be paid.
Schedule 3 paragraph 31
War disablement pension
8.023 War disablement pension may include various additions
and increases. Disregard £10 of the total amount. CAA may also be paid with War
disablement pension - see 3.014 and 8.006 for treatment of AA.
Other disregarded sums
8.024 Varying amounts are disregarded from the following
types of income:
• Annuity income from a home income plan (8.025)
• Income from sub-letting (8.031)
• Mortgage protection insurance policies (8.033)
• Income from certain disregarded capital (8.037)
Annuity income from home income plan
8.025 There are different types of annuity plans (see
paragraphs 8.013 to 8.014). Although income from an annuity is normally taken fully into
account, this general rule does not apply to "home income plans". Under these
schemes, a retired person who owns his home obtains a loan secured on the property. He
uses part of the loan (or all of it) to buy an annuity which provides an income. He may
also have used part of the loan for other purposes, for example improving or extending the
property. The gross income from the annuity covers the interest payments on the original
loan and provides an income for the person.
8.026 In order to qualify for any disregard on the income
from a home income plan, one of the annuitants must still be occupying the dwelling as his
home. This might happen where a couple have a joint annuity secured on the home, and one
partner continues to occupy the home when the other moves permanently to a residential
care or nursing home. In these circumstances, if the partner at home receives all the
income and makes full repayments on the loan, it will probably be appropriate to treat the
income as possessed by the partner at home. In this case, consider the question of
liability of relatives - see Section 11.
8.027 Where neither the resident nor any other annuitant
occupies the dwelling as his home, no disregard can be allowed on the income. When a
single person moves permanently to a residential care or nursing home, therefore, and
ceases to occupy the dwelling on which the loan is secured as his home, there will be no
disregard on the income from the annuity. In these circumstances the property may be sold,
and the loan repaid. Consider whether to take the value of the property into account as
capital under the provisions in Section 7. Where the property is taken into account, the
amount of the loan secured on the property will fall to be deducted in calculating the
value.
8.028 Where a resident receives income from a home income
plan annuity, and a joint annuitant continues to occupy the property, specified amounts
can be disregarded from the gross weekly income, but only where certain conditions
are satisfied (see paragraph 8.029). The amounts which may be disregarded are:
a) the net weekly interest on the loan where income tax is
deductible from the interest; or
b) the gross interest on the loan in any other case.
8.029 The conditions to be satisfied before any amount may
be disregarded from the weekly income are:
a) the loan must have been made as part of a scheme which
required that at least 90% of that loan be used to purchase the annuity; and
b) the annuity ends with the life of the person who
obtained the loan, or where there are two or more annuitants (including the person who
obtained the loan), with the life of the last surviving annuitant; and
c) the person who obtained the loan or one of the other
annuitants is liable to pay the interest on the loan; and
d) the person who obtained the loan (or each of the
annuitants where there are more than one), must have reached the age of 65 at the time the
loan was made; and
e) the loan was secured on a dwelling in Great Britain and
the person who obtained the loan (or one of the other annuitants) owns an estate or
interest in that dwelling; and
f) the person who obtained the loan or one of the other
annuitants occupies the dwelling as his home at the time the interest is paid.
8.030 Where the resident is using part of the annuity
income to repay the loan, disregard the amount he pays as interest on the loan.
Under some schemes, the capital is not repaid until the person dies or the annuity ends.
In this case the payments the person makes on the loan will be interest only. If the
resident qualifies for tax relief on the interest he pays, disregard the net interest
paid. Otherwise, disregard the gross interest.
Schedule 3 para 12
Income from sub-letting
8.031 Income from sub-letting carries a disregard only
where the resident occupies the dwelling of which part is sub-let as his home. This will
therefore apply only to assessing a temporary resident. The disregard is shown in Annex A.
See also paragraph 8.017 for income from sub-letting part of the property which is not
part of the living accommodation, eg garage or garden).
Schedule 3 para 12
Income from boarders
8.032 A boarder is someone for whom at least one cooked
meal is provided. Where a resident has income from a boarder the first £20 of the income
should be ignored plus half of any balance over £20.
Example
A temporary resident receives £50 per week as income from
a boarder living in his previous dwelling. The first £20 is ignored plus half of the
remaining £30 (ie £15) making a total of £35 of the £50 to be ignored.
Schedule 3 para 13
Mortgage protection insurance policies
8.033 Any income from an insurance policy is normally taken
into account. However, this does not apply to income from mortgage protection policies. A
mortgage protection policy is one which is taken out:
a) to insure against the risk of not being able to make
repayments on a loan; or
b) to protect the premiums payable on an endowment policy
where the policy is held as security for a loan.
8.034 The income from these policies qualifies for a
disregard only where the purpose of the loan is:
a) to acquire an interest in the dwelling occupied as the
home; or
b) for repairs or improvements to the dwelling occupied as
the home.
8.035 The income from the policy must be being used to meet
the repayments on the loan.
8.036 The amount of income from such a policy which should
be disregarded is the weekly sum of:
a) the amount which covers the interest on the loan; plus
b) the amount of the repayment which reduces the capital
outstanding; plus
c) the amount of the premium due on the policy.
Schedule 3 para 19
It should be remembered that Income Support may be adjusted
to take account of the income from the policy, so income previously disregarded under
3.009 or 8.040 may not longer be in payment.
Income From Certain Disregarded Capital
8.037 Where income is received from certain property of
which the capital value is being disregarded (see 8.015), the income should be taken into
account in full less any mortgage repayments, or payments of Water rates or
payments of Council Tax made during the same period as that in respect of which the income
was received.
Schedule 3 para 14
Income fully disregarded
8.038 The following types of income are fully disregarded:
• See 3.014 for the treatment of AA and DLA (Care) for
temporary residents and 8.006 for permanent residents
• That part of an Income Support award which is paid
in respect of home commitments for temporary residents (8.039)
• Certain charitable and voluntary payments (8.056)
• Child Support Maintenance Payments unless the child
is accommodated with the resident under Part III of the National Assistance Act 1948
(mother and baby units - see 8005)
• Christmas bonus (8.041)
• Any payment from:
• the Macfarlane Trust
• the Macfarlane (Special Payments) Trust
• the Macfarlane (Special Payments) (No 2 Trust)
• the Fund (payments to haemophiliacs infected with
HIV)
• the Independent Living Fund
• the Independent Living (Extension Fund)
• the Independent Living (1993) Fund (8.042)
• Council Tax Benefit
• Disability Living Allowance (Mobility Component) and
Mobility Supplement
• Gallantry awards (8.043)
• Income frozen abroad (8.044)
• Income in kind (8.045)
• Social Fund payments
• War widows special payments (8.046)
• Work expenses paid by employer, and expenses paid to
voluntary workers (8.049 and 8.050).
Income Support paid for home commitments
8.039 Under the Income Support rules, an amount may be
included in the award of Income Support in respect of specified expenses to maintain the
home address. Payment may continue for up to 52 weeks.
8.040 Any Income Support a resident receives is normally
taken into account in full in assessing the charge. However, where the award includes an
amount for home commitments, that part of the Income Support award is fully disregarded.
The amount awarded for home commitments is shown as a separate entry on form A14N
(clerical) or computer produced Award Calculation Sheet which the Benefits Agency sends to
the resident. If the form is not available, ask the Benefits Agency office to identify the
amount.
Schedule 3 para 26
Christmas Bonus
8.041 A Christmas Bonus is paid each year in the week
starting the first Monday in December. It is paid to people who are entitled to specified
benefits, for example:
• Attendance Allowance;
• Retirement Pension;
• Widow’s and War Widow’s Pensions;
• War Disablement Pension;
• Invalidity Pension or Severe Disablement Pension.
The Christmas bonus is fully disregarded in assessing the
charge.
Schedule 3 para 22
Payments from any of the Macfarlane Trusts, The Fund or the
Independent Living Funds
8.042 Payments from the Macfarlane Trust, the Macfarlane
(Special Payments) Trust, the Macfarlane (Special Payments) (No 2) Trust, the Fund, the
Independent Living Fund, the Independent Living (Extension) Fund or the Independent Living
(1993) Fund do not have to be declared if they are kept in a separate bank or building
society account from the resident’s other resources. All payments are fully
disregarded.
Schedule 3 para 24
Gallantry awards
8.043 Gallantry awards are:
• Victoria Cross Annuities;
• George Cross Annuities;
• analogous awards eg one from another country.
Schedule 3 para 8
These payments are fully disregarded.
Income frozen abroad
8.044 Income paid outside the UK which cannot be
transferred to the UK should be fully disregarded so long as it continued to be frozen
outside the UK.
Schedule 3 para 16
Income in kind
8.045 Income in kind means income received in the form of
food, clothing, cigarettes etc. The value of such income is disregarded in full.
Schedule 3 para 4
War widows special payments
8.046 War widows special payments are made to the widows of
men who died from injuries or illness which resulted from service ending before 31 March
1973. The special payments are intended to compensate those widows who did not benefit
from the amendments to the Armed Forces Pension Scheme. These payments are fully
disregarded. Payments are made under:
a) the Naval and Marine Pay and Pensions (Special War
Widows Payment) Order 1990, made under section 3 of the Naval and Marine Pay and Pensions
Act 1865;
b) the Royal Warrant of 19 February 1990 amending the
Schedule to the Army Pensions Warrant 1977;
c) the Queen’s Order dated 26 February 1990 made under
section 2 of the Air Force (Constitution) Act 1977;
d) the Home Guard War Widows Special Payments Regulations
1990 made under section 151 of the Reserve Forces Act 1980;
e) the Orders dated 19 February 1990 amending orders made
on 12 December 1980 concerning the Ulster Defence Regiment made in each case under section
140 of the Reserve Forces Act 1980.
8.047 A small number of widows do not qualify for the
normal UK widows pension, even though their circumstances are such that they might expect
to do so. In these cases, ex-gratia payments are made at the same rate as the appropriate
war widows benefit. Because they do not qualify for war widow’s pensions under the
normal rules, they are also excluded from the war widow’s special payments scheme.
The Secretary of State for Defence may therefore make special payments which are analogous
to those listed above (paragraph 8.046). Such payments are fully disregarded in the
assessment.
8.048 War widows special payments and analogous payments
can normally be identified by the amount contained in the war widow’s pension order
book. In cases of doubt, contact the DSS War Pensions Office, at Norcross, Blackpool FY5
3TA (Tel 0253-856123). They will need to know the name and reference number (shown on the
pension book) of the war widow.
Schedule 3 para 25
Work expenses paid by employer
8.049 Where a person who is in paid employment receives a
payment from the employer in respect of expenses which are incurred in the course of the
employment that payment is fully disregarded. The payments must be for expenses incurred
exclusively and necessarily in the course of work.
Schedule 3 para 3
Expenses paid to voluntary workers
8.050 Where a person works for a charitable or voluntary
body or as a volunteer, and receives no other payment as a result of the employment, any
payment in respect of expenses which are actually incurred is fully disregarded.
Schedule 3 para 2
Charitable and voluntary payments
General
8.051 A charitable payment is not necessarily one made by a
recognised charity, but may include payments made from charitable motives. A voluntary
payment is one which the payer is under no legal obligation to make.
8.052 A charitable or voluntary payment which is not made
regularly and is not due to be made regularly is treated as capital.
Reg 22(7)
8.053 Payments which are made regularly or due to be made
regularly are either:
a) subject to a £10 disregard; or
b) fully disregarded.
£10 disregarded
8.054 Disregard £10 of any charitable or voluntary payment
if it is intended and used for any items which is already covered by the local authority
contract with the home, eg food or heating, subject to the overall disregard mentioned at
8.022.
8.055 Disregard £10 of any other payment which is not
intended for any specific item subject to the overall disregard mentioned at 8.022.
Schedule 3 para 10(1)
Full disregard
8.056 A payment which is intended and used to pay for a
specific item which is not covered by the home’s fees should be fully disregarded.
For example, a payment to enable the resident to have his own telephone or television, or
for a weekly outing which is not paid for under the terms of the contract.
Schedule 3 para 10(2)
Payments to meet higher fees
8.057 Special rules apply to charitable or voluntary
payments which are intended and used to meet a home’s fees where the fees for
that home are higher than the amount the local authority would normally pay. These
payments are intended to allow the resident some freedom of choice about where they wish
to live. See paragraphs 8.018-8.019.
Schedule 3 para 29(6)
Income treated as capital
8.058 Certain forms of income are treated as capital - see
6.038 to 6.045 for details.
Reg 22
Notional Income
8.059 A resident may be treated as having an income which
he does not actually receive in a variety of situations. Such income is described as
notional income and may be:
a. income which is paid to the local authority by a third
party under an agreement to contribute towards the fees of a home.
b. income which would be available on application
c. income which is due but has not yet been paid
d. income which the resident has disposed of.
Guidance on the factors to be considered is in the
following paragraphs.
Reg 17
Actual and notional income
8.060 If the resident’s actual income is such that the
full charge is assessed as being paid it will not be necessary to consider the question of
notional income.
Treatment of notional income
8.061 Notional income is calculated and treated in the same
way as actual income.
Payments to the local authority by a third party
8.062 Where a third party is making a contribution towards
the cost of the accommodation, the amount the third party is paying should be treated as
the notional income of the resident. This is to ensue that the local authority take the
money into account when assessing the charge.
8.062A Where a third party makes a payment directly to the
LA in respect of a resident’s arrears of charges for residential accommodation it
should not be treated as the resident’s notional income and will not therefore need
to be taken into account as available towards the resident’s current charge. In order
to avoid the payment being regarded as the resident’s capital (see 6.044A), it is
recommended that, where a single payment or a series of payments are offered by a third
party to help clear arrears, arrangements are made for the payment to go directly to the
LA.
8.063 The remaining forms of notional income depend on the
local authority being satisfied that the resident has deprived himself of that income in
order to reduce the charge payable for his accommodation.
Income available on application
General
8.064 Subject to certain exemptions, income which the local
authority is satisfied would be available to the resident if an application were made, but
which has not yet been acquired, is to be treated as belonging to that resident.
Reg 17(2)
Amount of income
8.065 Payments of the following cannot be taken into
account as notional income:
1. income payable under a discretionary trust
2. income payable under a trust derived from a payment made
in consequence of a personal injury
3. Family Credit
4. Disability Working Allowance
Also income which would be fully disregarded should not be
included as notional income, for example Housing Benefit, DLA (mobility) and refund of
income tax.
8.066 Income which is subject to the awarding
authority’s discretion, ie the resident has no right to payment shall also not be
taken into account.
Reg 17(2)
8.067 Any potential entitlement to Severe Disablement
Allowance should not be taken into account. This is because entitlement to this benefit is
based on medical conditions which the local authority can not assume are satisfied.
Reg 17(2)
8.068 All other income should be considered. Examples
of income which may be treated as belongings to the claimant are:
1. unclaimed councillors attendance allowance;
2. unclaimed Social Security benefits (but not Unemployment
Benefit for someone not required to be available for work, One Parent Benefit or Severe
Disablement Allowance);
3. occupational pension not claimed.
Date taken into account
8.069 The income should be taken into account from the date
it could be expected to be acquired if an application was made. In considering the
earliest date that account can be taken of the income the local authority should:
1. assume the application was made on the date the local
authority first became aware of the possible income; and
2. take into account any time limits which might limit the
period the period of arrears.
Reg 17(2)
Examples
1. A resident aged 69 is not receiving a retirement pension
to which he would have been entitled had he applied. The local authority becomes aware of
the possible entitlement on 30/9/93. As retirement pension can only be backdated a year
from date of claim the local authority only take it into account as income from 1/10/92.
2. The local authority become aware that a resident aged 64
is not receiving an occupational pension to which he would have been entitled from the age
of 60. On his 65th birthday his former employers state that he will be paid all the
pension due from age 60. The local authority should take the pension into account from age
60.
Income due but not paid
8.070 Any income which is due to a resident, but which has
not been paid, is to be treated as belonging to the resident. This does not apply to:
1. income payable under a discretionary trust
2. income payable under a trust derived from a payment made
in consequence of a personal injury
3. occupational pension which is not being paid, because:
a. the trustees or managers of the scheme have suspended or
ceased payments due to insufficiency of resources, or
b. the trustees or managers of the scheme have insufficient
resources available to them to meet in full the scheme’s liabilities.
Reg 17(2)
8.070A Examples of where to take into account income which
is due to the resident, but which has not been paid are:
1. superannuation or other income due but not yet paid (for
example, because of a strike by pay clerks)
2. pension or grant which has ceased temporarily, for
example due to a postal strike.
Deprivation of income
8.071 A resident is to be treated as possessing income of
which he has deprived himself for the purpose of paying a reduced charge.
Reg 17(1)
Example
A resident is assessed as having to pay the full charge
based on his income from retirement pension and occupational pension. When reviewing the
charge the local authority find that he has sold his right to receive the occupational
pension thereby reducing the charge he is assessed as having to pay. The local authority
decides that this was done for the purpose of reducing the charge and the occupational
pension was taken into account.
Meaning of deprive
8.072 A person will have deprived himself of a resource if,
as a result of his own act, he ceases to possess that resource.
Questions for consideration
8.073 Where the resident appears to have deprived himself
of income the local authority should consider the following paragraphs:
Was it the resident’s income?
8.074 Where a person, before he deprived himself of an
income, was in receipt that income it is reasonable to assume that the resource belonged
to him. Sometimes there will be other evidence such as a letter or documentation which
shows that the income was properly payable to the resident.
Has deprivation occurred?
8.075 Deprivation will have occurred if a person
relinquishes, or transfers to another person, an income which:
1. he has been receiving or was due to receive and:
2. would have continued to receive had he not relinquished
or transferred it.
8.076 It is up to the resident to prove that he no longer
has the income. If he cannot prove that the income has been disposed of the local
authority should treat the resident as still possessing the actual income.
Purpose of the disposal of income
8.077 There may have been more than one purpose of the
disposal of income only one of which is to avoid a charge, or a lower charge. This may not
be the resident’s main motive but it must be a significant one.
Timing of the disposal of income
8.078 Consideration should be given to the timing of the
disposal of the asset when deciding whether the purpose of disposing of the asset was to
avoid a charge for the accommodation.
8.079 The local authority should make a judgement as to the
purpose of the disposal of income only after balancing all the person’s motives,
explicit and implicit, and the timing behind the action.
Conversion of income to a capital asset
8.080 Where, for the purpose of paying a reduced charge or
no charge, the right to receive an income resource has been sold, and therefore converted
from income to a capital asset, the local authority should consider taking account of:
1. the amount of the former income resource or
2. if the newly acquired capital gives rise to a tariff
income or an increase in tariff income, the difference between the former income resource
and the tariff income, or the increase in tariff income, arising from that capital asset.
Examples
1. A resident sold the right to receive an income under an
annuity of £10 per week for £2800. Having no other capital the £2800 did not affect the
resident’s assessment of charges. The local authority decided that the resident sold
the right to receive the income for the purpose of reducing his assessed charge and
treated the resident as receiving £10 per week notional income.
2. A resident sold the right to receive income under an
annuity of £10 per week for £2800. The resident’s other capital was £1550 and so
the total capital of £4350 produced a tariff income of £6 per week. The local authority
decided that the resident had sold the right to receive the income for the purpose of
reducing his assessed charge and treated the resident as notionally receiving the £4
difference between the tariff income and the original £10 per week from the annuity.
3. A resident sold the right to receive income under an
annuity of £10 per week for £2000. The resident’s other capital of £3100 produced
a tariff income of £1 per week. The local authority decided that the resident had sold
the right to receive the income for the purpose of reducing the assessed charge. The
increase in the amount of tariff income (resulting from the sale of the right to receive
an income) was £8 (ie £2000 + 250). A notional income of £2 per week was calculated by
deducting the increase in tariff income (£8) from the original income payable under the
annuity (£10).
Deprivation decided
8.081 If it is decided that the resident has disposed of
income in order to avoid a charge or to reduce the charge payable, the local authority
will need to assess the charge payable using the resident’s notional income.
Reg 17(1)
8.082 If the resident is unable to pay the charge assessed
using the notional income, the local authority should consider whether the provisions of
the Health and Social Services and Social Security Adjudication’s Act 1983 can be
used to transfer the liability for that part of the charges assessed as a result of the
notional income to the person to whom the income has been passed. (See separate guidance).
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