PART IVU.K.INCOME AND CAPITAL

CHAPTER VIU.K.CAPITAL

Capital limitU.K.

28.  For the purposes of section 22(6) of the Act as it applies to [F1working families' tax credit] (no entitlement to benefit if capital exceeds prescribed amount), the prescribed amount is [F2£8,000].

Calculation of capitalU.K.

29.—(1) For the purposes of Part II of the Act as it applies to [F3working families' tax credit], the capital of a claimant to be taken into account shall, subject to paragraph (2), be the whole of his capital calculated in accordance with this Part and any income treated as capital under regulation 31 (income treated as capital).

(2) There shall be disregarded from the calculation of a claimant's capital under paragraph (1) any capital, where applicable, specified in Schedule 3.

Disregard of capital of child or young personU.K.

30.  The capital of a child or young person who is a member of the claimant's family shall not be treated as capital of the claimant.

Income treated as capitalU.K.

31.—(1) Any amount by way of a refund of income tax deducted from profits or emoluments chargeable to income tax under Schedule D or E shall be treated as capital.

(2) Any holiday pay which is not earnings under regulation 19(1)(b) (earnings of employed earners) shall be treated as capital.

[F4(3)  Any charitable or voluntary payment which is not made or is not due to be made at regular intervals, other than a payment which is made under the Macfarlane Trust, the Macfarlane (Special Payments) Trust, the Macfarlane (Special Payments) ( No. 2) Trust [F5, the Fund] [F6, the Eileen Trust] or [F7the Independent Living Funds] shall be treated as capital.]

(4) Except any income derived from capital disregarded under paragraph 1, [F81A,] 2, 4, 6 [F9, 13 or 26 to 30] of Schedule 3, any income derived from capital shall be treated as capital but only from the date it is normally due to be credited to the claimant's account.

(5) In the case of employment as an employed earner, any advance of earnings or any loan made by the claimant's employer shall be treated as capital.

(6) Any maintenance payment other than one to which regulation 16(2) [F10or (2A)] (normal weekly income other than earnings) applies shall be treated as capital.

[F11(7) There shall be treated as capital the gross receipts of any commercial activity carried on by a person in respect of which assistance is received under an employment programme specified in regulation 75(1)(a)(ii)(aa)(ii) of the Jobseeker’s Allowance Regulations 1996 (self-employment route of the Employment Option of the New Deal), but only in so far as those receipts were payable into a special account (as defined for the purposes of Chapter IVA of Part VIII of those Regulations) during the period in which that person was receiving such assistance.]

[F12(8) Any arrears of subsistence allowance which are paid to a claimant as a lump sum shall be treated as capital.]

[F13(9) Any bounty derived from employment as a member of any territorial or reserve force prescribed in Part I of Schedule 3 to the Social Security (Contributions) Regulations 1979 and paid at intervals of at least one year shall be treated as capital.]

Calculation of capital in the United KingdomU.K.

32.  Capital which a claimant possesses in the United Kingdom shall be calculated—

(a)except in a case to which sub-paragraph (b) applies, at its current market or surrender value less—

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

(ii)the amount of any incumbrance secured on it;

(b)in the case of a National Savings Certificate—

(i)if purchased from an issue the sale of which ceased before 1st July last preceding the date of claim, at the price which it would have realised on that 1st July had it been purchased on the last day of that issue;

(ii)in any other case, at its purchase price.

Calculation of capital outside the United KingdomU.K.

33.  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 incumbrance secured on it.

Notional capitalU.K.

34.—(1) A claimant shall be treated as possessing capital of which he has deprived himself for the purpose of securing entitlement to [F14working families' tax credit] or increasing the amount of that benefit [F15except—

(a)where that capital is derived from a payment made in consequence of any personal injury and is placed on trust for the benefit of the claimant; or

(b)to the extent that the capital which he is treated as possessing is reduced in accordance with regulation 34A (diminishing notional capital rule);] [F16or

(c)any sum to which paragraph 46(a) or 47(a) of Schedule 3 (disregard of compensation for personal injuries which is administered by the Court) refers,]

(2) Except in the case of—

(a)a discretionary trust;

(b)a trust derived from a payment made in consequence of a personal injury; or

(c)any loan which would be obtainable only if secured against capital disregarded under Schedule 3; [F17or

(d)a personal pension scheme or retirement annuity contract,]

(e)[F18any sum to which paragraph 46(a) or 47(a) of Schedule 3 (disregard of compensation for personal injuries which is administered by the Court) refers,]

any capital which would become available to the claimant upon application being made but which has not been acquired by him shall be treated as possessed by him.

(3) [F19Any payment of capital, other than a payment of capital specified in paragraph (3A)] [F20of those Regulations] made—

[F21(a)to a third party in respect of a member of [F22the family] (but not a member of the third party’s family) shall be treated as possessed by that member of the family to the extent that it is used for his food, ordinary clothing or footwear, household fuel F23 ... or housing costs [F24or is used for any personal community [F25charge,] collective community charge contribution [F26or council tax] for which that member is liable]; and in this sub-paragraph the expression “ordinary clothing or footwear” means clothing or footwear for normal daily use, but does not include school uniforms, or clothing or footwear used solely for sporting activities;]

(b)to a member of the family in respect of a third party (but not in respect of another member of the family) shall be treated as possessed by that member to the extent that it is kept by him or used on behalf of any member of the family.

[F27(3A) Paragraph (3) shall not apply in respect of a payment of capital made—

(a)under the Macfarlane Trust, the Macfarlane (Special Payments) Trust, the Macfarlane (Special Payments) (No.2) Trust, the Fund, the Eileen Trust or the Independent Living Funds; or

(b)pursuant to section 2 of the Employment and Training Act 1973 in respect of a person’s participation—

(i)in an employment programme specified in regulation 75(1)(a)(ii);

(ii)in a training scheme specified in regulation 75(1)(b)(ii); or

(iia)[F28in the Intensive Activity Period specified in regulation 75(1)(a)(iv) of those Regulations or in the Intensive Activity Period for 50 plus; or]

(iii)in a qualifying course within the meaning specified in regulation 17A(7).]

(4) 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 29 (calculation of capital), be disregarded; and

(b)he shall, subject to paragraph (5), 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.

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

(6) Where a claimant is treated as possessing capital under any of paragraphs (1) to (4) the foregoing provisions of this Chapter shall apply for the purposes of calculating its amount as if it were actual capital which he does possess.

[F29(7) For the avoidance of doubt a claimant is to be treated as possessing capital under paragraph (1) only if the capital of which he has deprived himself is actual capital.]

[F30Diminishing notional capital ruleU.K.

34A.—(1) Where a claimant is treated as possessing capital under regulation 34(1) (notional capital), the amount which he is treated as possessing—

(a)in the case of a benefit week which 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 (3);

(b)in the case of a benefit week in respect of which 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 (4) is satisfied,

shall be reduced by the amount determined under paragraph (4).

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

(a)he is entitled to [F31working families' tax credit]; and

(b)but for regulation 34(1), he would have been entitled to an additional amount of [F31working families' tax credit] in that benefit week.

(3) In a case to which paragraph (2) applies, the amount of the reduction for the purposes of paragraph (1)(a) shall be equal to the aggregate of—

(a)the additional amount of [F32working families' tax credit] to which the claimant would have been entitled; and

[F33(b)if the claimant would, but for regulation 43(1) of the Housing Benefit (General) Regulations 1987 (notional capital), have been entitled to housing benefit or to an additional amount of housing benefit in respect of the benefit week in which the date of the last claim for [F32working families' tax credit] falls, the amount (if any) which is equal to–

(i)in a case where no housing benefit is payable, the amount to which he would have been entitled, or

(ii)in any other case, the amount equal to the additional amount of housing benefit to which he would have been entitled; and

(c)if the claimant would, but for regulation 33(1) of the Community Charge Benefits (General) Regulations 1989 (notional capital) have been entitled to community charge benefit or to an additional amount of community charge benefit in respect of the benefit week in which the date of the last claim for [F32working families' tax credit] falls, the amount (if any) which is equal to–

(i)in a case where no community charge benefit is payable, the amount to which he would have been entitled, or

(ii)in any other case, the amount equal to the additional amount of community charge benefit to which he would have been [F34entitled; and]]

[F35(d)if the claimant would, but for regulation 34(1) of the Council Tax Benefit (General) Regulations 1992 (notional capital), have been entitled to council tax benefit or to an additional amount of council tax benefit in respect of the benefit week in which the date of the last claim for [F32working families' tax credit] falls, the amount (if any) which is equal to—

(i)in a case where no council tax benefit is payable, the amount to which he would have been entitled, or

(ii)in any other case, the amount equal to the additional amount of council tax benefit to which he would have been entitled.]

(4) Subject to paragraph (5), for the purposes of paragraph (1)(b) the condition is that the claimant would have been entitled to [F36working families' tax credit] in the relevant week but for regulation 34(1) and in such a case the amount shall be equal to the aggregate of—

(a)the amount of [F37working families' tax credit] to which the claimant would have been entitled in the relevant week but for regulation 34(1); and

[F38(b)if the claimant would, but for regulation 43(1) of the Housing Benefit (General) Regulations 1987 have been entitled to housing benefit or to an additional amount of housing benefit in respect of the benefit week in which the first day of the relevant week falls, the amount (if any) which is equal to–

(i)in a case where no housing benefit is payable, the amount to which he would have been entitled, or

(ii)in any other case, the amount equal to the additional amount of housing benefit to which he would have been entitled; and

(c)if the claimant would, but for regulation 33(1) of the Community Charge Benefits (General) Regulations 1989 have been entitled to community charge benefit or to an additional amount of community charge benefit in respect of the benefit week in which the first day of the relevant week falls, the amount (if any) which is equal to–

(i)in a case where no community charge benefit is payable, the amount to which he would have been entitled, or

(ii)in any other case, the amount equal to the additional amount of community charge benefit to which he would have been [F39entitled; and]]

[F40(d)if the claimant would, but for regulation 34(1) of the Council Tax Benefit (General) Regulations 1992 (notional capital), have been entitled to council tax benefit or to an additional amount of council tax benefit in respect of the benefit week in which the first day of the relevant week falls, the amount (if any) which is equal to—

(i)in a case where no council tax benefit is payable, the amount to which he would have been entitled, or

(ii)in any other case, the amount equal to the additional amount of council tax benefit to which he would have been entitled.]

(5) The amount determined under paragraph (4) shall be re-determined under that paragraph if the claimant makes a further claim for [F41working families' tax credit] and the conditions in paragraph (6) are satisfied, and in such a case—

(a)sub-paragraphs (a), (b) and (c) of paragraph (4) shall apply as if for the words “relevant week” there were substituted the words “relevant subsequent week”; and

(b)subject to paragraph (7), the amount as re-determined shall have effect from the first week following the relevant subsequent week in question.

(6) The conditions are that—

(a)a further claim is made 22 or more weeks after—

(i)the first day of the relevant week;

(ii)in a case where there has been at least one re-determination in accordance with paragraph (5), the first day of the relevant subsequent week which last occurred;

whichever last occurred; and

(b)the claimant would have been entitled to [F42working families' tax credit] but for regulation 34(1).

(7) The amount as re-determined pursuant to paragraph (5) 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.

(8) For the purposes of this regulation—

(a)“benefit week” has the meaning prescribed in regulations 16 (date of entitlement under an award) and 27 ([F43working families' tax credit]) of the Social Security (Claims and Payments) Regulations 1987 except where it appears in paragraphs [F44(3)(b), (c) and (d) and (4)(b), (c) and (d)] where it has the meaning prescribed in regulation 2(1) of the Housing Benefit (General) Regulations [F451987 (interpretation),] regulation 2(1) of the Community Charge Benefits (General) Regulations 1989 (interpretation) [F46or regulation 2(1) of the Council Tax Benefit (General) Regulations 1992 (interpretation)] as the case may be;

(b)“relevant week” means the benefit week in which the capital in question of which the claimant has deprived himself within the meaning of regulation 34(1)—

(i)was for the first time taken into account for the purpose of determining his entitlement to [F43working families' tax credit]; or

(ii)was taken into account on a subsequent occasion for that purpose other than in respect of either a benefit week to which paragraph (2) applies or a further claim to which paragraph (5) applies;

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;

(c)“relevant subsequent week” means the benefit week in which any award of [F43working families' tax credit] in respect of the further claim referred to in paragraph (6)(a) would, but for regulation 34(1), have commenced, but it shall not be earlier than the twenty-seventh week after the week in which the existing amount took effect.]

Capital jointly heldU.K.

35.  Except where a claimant possesses capital which is disregarded under regulation 34(4) (notional capital), 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 [F47[F48to the whole beneficial interest therein in an equal share and the foregoing provisions of this Chapter 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]]

Calculation of tariff income from capitalU.K.

36.—(1) Where the claimant's capital calculated in accordance with this Chapter exceeds £3,000, it shall be treated as equivalent to a weekly income of £1 for each complete £250 in excess of £3,000 but not exceeding [F49£8,000].

(2) Notwithstanding paragraph (1), where any part of the excess is not a complete £250 that part shall be treated as equivalent to a weekly income of £1.

(3) For the purposes of paragraph (1), capital includes any income treated as capital under regulation 31 (income treated as capital).