| Circular SWSG15/94 - Community Care: National
Assistance (Assessment of Resources) (Amendment No.2) Regulations 1994 - Regulations and
Guidance
SECTION 8 - 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 additions 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)
Income from certain disregarded capital
8.015 Income form 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 as 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 is incapacitated.
the Eileen Trust , the 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
Dependency increases paid with certain benefits
8.042A Dependency increases for adults can be paid with
Unemployment Benefit, Sickness Benefit, Maternity Allowance, Invalidity Benefit, Severe
Disablement Allowance, Retirement Pension, Invalid Care Allowance and Unemployability
Supplement paid with Industrial Injuries Disablement Benefit. Child Dependency Increases
can be paid with Unemployment Benefit or Sickness Benefit (where the beneficiary has
reached pension age), Invalidity Benefit, Severe Disablement Allowance, Retirement
Pension, Invalid Care Allowance and Unemployability Supplement (as above). Where the
dependent does not live with the resident, the increase will only be payable if the
resident pays over at least the amount of the
increase to the dependent. Where the increase is being paid
over to the dependent, the amount of the increase should be disregarded in full.
Schedule 3 para 28B
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 continues 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 14
Payments made to trainees
8.045A Trainees on certain employment schemes may receive a
training premium and reimbursement of travelling expenses. These should be fully
disregarded. The actual training allowance should be taken into account.
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, which are made
under the legislation listed in annex F, are fully disregarded.
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 23
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 23
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
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 disregard
8.054 Disregard £10 of any charitable or voluntary payment
if it is intended and used for any item 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 of the third party is paying should be treated
as the notional income of the resident. this is to ensure 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
local authority 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 local authority.
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, local authority (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 belonging 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 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 pensions 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 of 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. The local authority
should bear in mind, however, that deprivation can be considered for resources disposed of
at any time. The 6 month restriction only applies to using the provisions of section 21 of
the Health and Social Services and Social Adjudication Act 1983.
Conversion of income to a capital asset
8.080 Where, for the purposes 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 £2,000 ÷ 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 Adjudications 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). |
