Calculating your weekly income.
You will need to add together all income from the following sources;
- earnings;
- working tax credit;
- "deemed income" from capital worth more than £6,000 (£10,000 after November 2009);
- any income from annuity contracts except for home income plans and structured settlements;
- social security benefits except for those listed below;
- foreign social security benefits;
- war disablement and war widow/widower's pension payments and similar foreign payments;
- payments from the Armed Forces and Reserve Forces Compensation Scheme;
- payments from a state Retirement Pension (both contributory and non-contributory);
- payments from an occupational pension;
- payments from a personal pension scheme;
- payments from a retirement annuity contract;
- income from an overseas pension arrangement, this is defined as "a scheme or arrangement which has the effect of providing benefits to or in respect of
employed earners on the termination of employment, death or retirement;
- income from foreign annuities or pensions. Foreign state pension payments are treated as foreign social security benefits;
- income from a civil list pension;
- income from an equity release scheme but not from home income plans (see below);
- income from the Financial Assistance Scheme;
- any payments from the Pension Protection Fund, this fund compensates members of final salary pension schemes where the employer goes out of business
and the scheme is left with insufficient funds;
- any income from an annuity except for home income plans and structured settlements;
- income from a death in service award except for those made in respect of a child which are ignored;
- maintenance payments made to you or your partner, maintenance payments in respect of a child are ignored;
- income from a trust fund, except from a fund that has been set up as a result of personal injury;
- any payments for copyright, royalties or any book registered under the Public Lending Right Scheme.
Income where £10 is disregarded.
The following have the first £10 per week disregarded. The remainder is all taken into account.
War Disability Pension and War Widows (and Widowers) Pension or a similar payment made by a foreign government.
A guaranteed income payment made under the Armed Forces and Reserve Forces Compensation Scheme or a similar payment made by a foreign government.
Payments made to the victims of National Socialism.
Widowed parents allowance.
Widowed mothers allowance.
Income that is partially disregarded.
Home income plans.
Home income plans are schemes whereby retired people who own their own home take out a loan secured on the home and use this money to purchase an annuity
which gives them an income.
The DWP will disregard the net weekly interest payment (where income tax is paid) or the gross amount of interest (where income tax is not paid) if the
following conditions are met:
- the loan was taken out under a scheme under which at least 90% of the proceeds of the part of the loan intended to buy an annuity have been used to
buy an annuity; and
- the annuity is due to end with the death of the person to whom the loan was made or (in the case of a couple) the death of the last surviving partner;
and
- the loan was made when the borrower was at least 65; and
- the loan was secured on a property in Great Britain which was owned by the borrower; and
- the person to whom the loan was made (or one of the annuitants) occupies the dwelling on which the annuity was secured at the time the interest was paid;
and
- the interest on the loan is paid by the person to whom the loan was made or by one of the annuitants.
Income from board and lodging.
Board and lodging accommodation is defined as accommodation provided for a charge that includes providing the accommodation and some
"cooked or prepared" meals. It does not include accommodation provided by a close relative other than on a commercial basis.
When working out the income from boarding and lodging the DWP will use the following formula-
- add together all the payments made for board and lodge for the week and
- deduct £20 from that amount and
- deduct 50% of any excess over £20
Once the above deuctions have been made, the remainder will be counted as income.
Income from sub-letting.
Some income from sub-letting is disregarded. The DWP will recognise that you are subletting if-
- you own the freehold or leasehold interest in any property or you are a tenant of any property and
- you occupy part of that property and
- you have an agreement allowing another person to occupy that property in return for rent.
When working out your income the DWP will disregard the first £20 per week paid by each subtenant.
Social security payments that are fully disregarded.
The DWP will ignore payments from the following benefits when working out your income-
- attendance allowance, constant attendance allowance and exceptionally severe disablement allowance;
- payments for attendance under the civillian's personal injury scheme;
- bereavement payment- this is paid as a lump sum;
- child benefit;
- child dependancy increases (these are to be radually phased out an replaced by tax credits;
- child's special allowance. This is payable to a divorcee on the death of her former husband if she has a child and her former husband was helping or
liable to support and she has not remarried;
- Christmas bonus;
- council tax benefit;
- guardian's allowance which is paid to a person who is entitled to child benefit for a child whose parents are dead or one of the parents is dead and the
other cannot be traced or the other is serving a long prison sentence;
- housing benefit;
- mobility allowance and mobility supplement;
- any payments from the social fund;
- war widow's (or widower's) pension;
Other sources of income that are fully disregarded.
The DWP will disregard the following:
- any bank charges or commission that you have paid in order to change foreign currency into sterling;
- any income which is payable in a foreign country and cannot be transferred to the UK. This normally occurs when a foreign country won't allow its
currency to be transferred to the UK;
- income from a disretionary trust except for payments for:
- food;
- ordinary clothing or footwear;
- household fuel;
- rent;
- council tax;
- water charges;
- any personal injury payments made to you or your partner.
Some income that is derived from capital is also disregarded- please see our
capital pages for more details.
