SCHEDULECouncil Tax Reduction Schemes (Default Scheme) (Wales)
PART 9Income and capital for the purposes of calculating eligibility for a reduction under this scheme and amount of reduction
CHAPTER 5Income: persons who are not pensioners
Average weekly earnings of employed earners: persons who are not pensioners
44.—(1) Where the income of an applicant who is not a pensioner consists of earnings from employment as an employed earner the applicant’s average weekly earnings must be estimated by reference to the applicant’s earnings from that employment—
(a)over a period immediately preceding the reduction week in which the application is made or treated as made and being a period of—
(i)5 weeks, if the applicant is paid weekly; or
(ii)2 months, if the applicant is paid monthly; or
(b)whether or not paragraph (a)(i) or (ii) applies, where an applicant’s earnings fluctuate, over such other period preceding the reduction week in which the application is made or treated as made as may, in any particular case, enable the applicant’s average weekly earnings to be estimated more accurately.
(2) Where the applicant has been in employment for less than the period specified in sub-paragraph (1)(a)(i) or (ii)—
(a)if the applicant has received any earnings for the period that the applicant has been in that employment and those earnings are likely to represent the applicant’s average weekly earnings from that employment the applicant’s average weekly earnings must be estimated by reference to those earnings;
(b)in any other case, the authority must estimate the applicant’s average weekly earnings(1).
(3) Where the amount of an applicant’s earnings changes the authority must estimate the applicant’s average weekly earnings by reference to the applicant’s likely earnings from the employment over such period as is appropriate in order that the applicant’s average weekly earnings may be estimated accurately but the length of the period will not in any case exceed 52 weeks.
(4) For the purposes of this paragraph the applicant’s earnings are to be calculated in accordance with paragraphs 48 and 49 (earnings of employed earners: persons who are not pensioners).
Average weekly earnings of self-employed earners: persons who are not pensioners
45.—(1) Where the income of an applicant who is not a pensioner consists of earnings from employment as a self-employed earner that applicant’s average weekly earnings must be estimated by reference to that applicant’s earnings from that employment over such period as is appropriate in order that that applicant’s average weekly earnings may be estimated accurately but the length of the period must not in any case exceed a year.
(2) For the purposes of this paragraph the applicant’s earnings must be calculated in accordance with paragraphs 50, 58 and 59 (earnings and net profit of self-employed earners).
Average weekly income other than earnings: persons who are not pensioners
46.—(1) The income of an applicant who is not a pensioner which does not consist of earnings must, except where sub-paragraph (2) applies, be estimated over such period as is appropriate in order that that applicant’s average weekly income may be estimated accurately but the length of the period must not in any case exceed 52 weeks; and nothing in this paragraph authorises an authority to disregard any such income other than that specified in Schedule 7 (sums disregarded in the calculation of income other than earnings: persons who are not pensioners).
(2) The period over which any benefit under the benefit Acts is to be taken into account is to be the period in respect of which that benefit is payable.
(3) For the purposes of this paragraph income other than earnings is to be calculated in accordance with paragraph 51 (calculation of income other than earnings: persons who are not pensioners).
Calculation of weekly income of employed earners: persons who are not pensioners
47.—(1) For the purposes of paragraphs 44 (average weekly earnings of employed earners), 46 (average weekly income other than earnings) and 56 (calculation of average weekly income from tax credits), where the period in respect of which a payment is made—
(a)does not exceed a week, the weekly amount is to be the amount of that payment;
(b)exceeds a week, the weekly amount is to be determined—
(i)in a case where that period is a month, by multiplying the amount of the payment by 12 and dividing the product by 52;
(ii)in any other case, by dividing the amount of the payment by the number equal to the number of days in the period to which it relates and multiplying the product by 7.
(2) For the purposes of paragraph 45 (average weekly earnings of self-employed earners) the weekly amount of earnings of an applicant is to be determined by dividing the applicant’s earnings over the assessment period by the number equal to the number of days in that period and multiplying the product by 7.
Earnings of employed earners: persons who are not pensioners
48.—(1) Subject to sub-paragraph (2), “earnings”, in the case of employment as an employed earner of a person who is not a pensioner, means any remuneration or profit derived from that employment and includes—
(a)any bonus or commission;
(b)any payment in lieu of remuneration except any periodic sum paid to an applicant on account of the termination of the applicant’s employment by reason of redundancy;
(c)any payment in lieu of notice or any lump sum payment intended as compensation for the loss of employment but only in so far as it represents loss of income;
(d)any holiday pay except any payable more than 4 weeks after termination or interruption of the employment;
(e)any payment by way of a retainer;
(f)any payment made by the applicant’s employer in respect of expenses not wholly, exclusively and necessarily incurred in the performance of the duties of the employment, including any payment made by the applicant’s employer in respect of—
(i)travelling expenses incurred by the applicant between the applicant’s home and place of employment;
(ii)expenses incurred by the applicant under arrangements made for the care of a member of the applicant’s family owing to the applicant’s absence from home;
(g)any award of compensation made under section 112(4) or 117(3)(a) of the Employment Rights Act 1996 (remedies and compensation for unfair dismissal);
(h)any payment or remuneration made under section 28, 34, 64, 68 or 70 of the Employment Rights Act 1996 (right to guarantee payments, remuneration on suspension on medical or maternity grounds, complaints to employment tribunals);
(i)any such sum as is referred to in section 112 of the SSCBA (certain sums to be earnings for social security purposes);
(j)any statutory sick pay, statutory maternity pay, statutory paternity pay or statutory adoption pay, or a corresponding payment under any enactment having effect in Northern Ireland;
(k)any remuneration paid by or on behalf of an employer to the applicant who for the time being is on maternity leave, paternity leave or adoption leave or is absent from work because the applicant is ill;
(l)the amount of any payment by way of a non-cash voucher which has been taken into account in the computation of a person’s earnings in accordance with Part 5 of Schedule 3 to the Social Security (Contributions) Regulations 2001.
(2) Earnings does not include—
(a)subject to sub-paragraph (3), any payment in kind;
(b)any payment in respect of expenses wholly, exclusively and necessarily incurred in the performance of the duties of the employment;
(c)any occupational pension;
(d)any payment in respect of expenses arising out of the applicant’s participation in a service user group.
(3) Sub-paragraph (2)(a) does not apply in respect of any non-cash voucher referred to in sub-paragraph (1)(l).
Calculation of net earnings of employed earners: persons who are not pensioners
49.—(1) For the purposes of paragraph 44 (average weekly earnings of employed earners: persons who are not pensioners), the earnings of an applicant derived or likely to be derived from employment as an employed earner to be taken into account must, subject to sub-paragraph (2), be the applicant’s net earnings.
(2) There is to be disregarded from an applicant’s net earnings, any sum, where applicable, specified in paragraphs 1 to 18 of Schedule 6 (sums disregarded in the calculation of earnings: persons who are not pensioners).
(3) For the purposes of sub-paragraph (1) net earnings must, except where sub-paragraph (6) applies, be calculated by taking into account the gross earnings of the applicant from that employment over the assessment period, less—
(a)any amount deducted from those earnings by way of—
(i)income tax;
(ii)primary Class 1 contributions under the SSCBA;
(b)one-half of any sum paid by the applicant by way of a contribution towards an occupational pension scheme;
(c)one-half of the amount calculated in accordance with sub-paragraph (5) in respect of any qualifying contribution payable by the applicant; and
(d)where those earnings include a payment which is payable under any enactment having effect in Northern Ireland and which corresponds to statutory sick pay, statutory maternity pay, ordinary or additional statutory paternity pay or statutory adoption pay, any amount deducted from those earnings by way of any contributions which correspond to primary Class 1 contributions under the SSCBA.
(4) In this regulation “qualifying contribution” means any sum which is payable periodically as a contribution towards a personal pension scheme.
(5) The amount in respect of any qualifying contribution is to be calculated by multiplying the daily amount of the qualifying contribution by the number equal to the number of days in the assessment period; and for the purposes of this paragraph the daily amount of the qualifying contribution is to be determined—
(a)where the qualifying contribution is payable monthly, by multiplying the amount of the qualifying contribution by 12 and dividing the product by 365;
(b)in any other case, by dividing the amount of the qualifying contribution by the number equal to the number of days in the period to which the qualifying contribution relates.
(6) Where the earnings of an applicant are estimated under paragraph 44(2)(b) (average weekly earnings of employed earners: persons who are not pensioners), the applicant’s net earnings are to be calculated by taking into account those earnings over the assessment period, less—
(a)an amount in respect of income tax equivalent to an amount calculated by applying to those earnings the basic rate of tax applicable to the assessment period less only the personal relief to which the applicant is entitled under sections 35 to 37 of the Income Tax Act 2007(2) (personal allowances) as is appropriate to the applicant’s circumstances but, if the assessment period is less than a year, the earnings to which the basic rate of tax is to be applied and the amount of the personal relief deductible under this sub-paragraph is to be calculated on a pro rata basis;
(b)an amount equivalent to the amount of the primary Class 1 contributions that would be payable by the applicant under the SSCBA in respect of those earnings if such contributions were payable; and
(c)one-half of any sum which would be payable by the applicant by way of a contribution towards an occupational or personal pension scheme, if the earnings so estimated were actual earnings.
Earnings of self-employed earners: persons who are not pensioners
50.—(1) Subject to sub-paragraph (2), “earnings”, in the case of employment as a self-employed earner of a person who is not a pensioner, means the gross income of the employment.
(2) “Earnings” does not include any payment to which paragraph 31 or 32 of Schedule 7 refers (payments in respect of a person accommodated with the applicant under arrangements made by a local authority or voluntary organisation and payments made to the applicant by a health authority, local authority or voluntary organisation in respect of persons temporarily in the applicant’s care) nor does it include any sports award.
(3) This paragraph applies to—
(a)royalties or other sums paid as a consideration for the use of, or the right to use, any copyright, design, patent or trade mark; or
(b)any payment in respect of any—
(i)book registered under the Public Lending Right Scheme 1982; or
(ii)work made under any international public lending right scheme that is analogous to the Public Lending Right Scheme 1982,
where the applicant is the first owner of the copyright, design, patent or trade mark, or an original contributor to the book or work concerned.
(4) Where the applicant’s earnings consist of any items to which sub-paragraph (3) applies, those earnings must be taken into account over a period equal to such number of weeks as is equal to the number obtained (and any fraction is to be treated as a corresponding fraction of a week) by dividing the earnings by—
(a)the amount of reduction under this scheme to which the applicant would have been entitled had the payment not been made, plus
(b)an amount equal to the total of the sums which would fall to be disregarded from the payment under Schedule 6 (sums disregarded in the calculation of earnings; persons who are not pensioners) as appropriate in the applicant’s case.
Calculation of income other than earnings: persons who are not pensioners
51.—(1) For the purposes of paragraph 46 (average weekly income other than earnings: persons who are not pensioners), the income of an applicant who is not a pensioner which does not consist of earnings to be taken into account must, subject to sub-paragraphs (2) to (6), be that applicant’s gross income and any capital treated as income under paragraph 52 (capital treated as income: persons who are not pensioners).
(2) There is to be disregarded from the calculation of an applicant’s gross income under sub-paragraph (1), any sum, where applicable, specified in Schedule 7.
(3) Where the payment of any benefit under the benefit Acts is subject to any deduction by way of recovery the amount to be taken into account under sub-paragraph (1) must be the gross amount payable.
(4) Where the applicant or, where the applicant is a member of a couple, the applicant’s partner is receiving a contributory employment and support allowance and that benefit has been reduced under regulation 63 of the Employment and Support Allowance Regulations 2008(3), the amount of that benefit to be taken into account is the amount as if it had not been reduced.
(5) Where an award of any working tax credit or child tax credit under the Tax Credits Act 2002 is subject to a deduction by way of recovery of an overpayment of working tax credit or child tax credit which arose in a previous tax year the amount to be taken into account under sub-paragraph (1) is to be the amount of working tax credit or child tax credit awarded less the amount of that deduction.
(6) Sub-paragraphs (7) and (8) apply where—
(a)a relevant payment has been made to a person in an academic year; and
(b)that person abandons, or is dismissed from, that person’s course of study before the payment to that person of the final instalment of the relevant payment.
(7) Where a relevant payment is made quarterly, the amount of a relevant payment to be taken into account for the assessment period for the purposes of sub-paragraph (1) in respect of a person to whom sub-paragraph (6) applies, is to be calculated by applying the formula—
where—
A = the total amount of the relevant payment which that person would have received had that person remained a student until the last day of the academic term in which that person abandoned, or was dismissed from, the course, less any deduction under paragraph 78(5) (costs of travel books and equipment);
B = the number of reduction weeks from the reduction week immediately following that which includes the first day of that academic year to the reduction week which includes the day on which the person abandoned, or was dismissed from, the course;
C = the weekly amount of the relevant payment, before the application of the £10 disregard, which would have been taken into account as income under paragraph 78(2) (treatment of student loans) had the person not abandoned or been dismissed from, the course and, in the case of a person who was not entitled to a reduction under this scheme immediately before that person abandoned or was dismissed from the course, had that person, at that time, been entitled to housing benefit;
D = the number of reduction weeks in the assessment period.
(8) Where a relevant payment is made by two or more instalments in a quarter, the amount of a relevant payment to be taken into account for the assessment period for the purposes of sub-paragraph (1) in respect of a person to whom sub-paragraph (6) applies, is to be calculated by applying the formula in sub-paragraph (7) but as if—
A = the total amount of relevant payments which that person received, or would have received, from the first day of the academic year to the day the person abandoned the course, or was dismissed from it, less any deduction under paragraph 78(5).
(9) In this regulation—
“academic year” and “student loan” have the same meanings as in Part 10 (students);
“assessment period” means—
(a)in a case where a relevant payment is made quarterly, the period beginning with the reduction week which includes the day on which the person abandoned, or was dismissed from, the course and ending with the reduction week which includes the last day of the last quarter for which an instalment of the relevant payment was payable to that person;
(b)in a case where the relevant payment is made by two or more instalments in a quarter, the period beginning with the reduction week which includes the day on which the person abandoned, or was dismissed from, the course and ending with the reduction week which includes—
(i)the day immediately before the day on which the next instalment of the relevant payment would have been due had the payments continued; or
(ii)the last day of the last quarter for which an instalment of the relevant payment was payable to that person,
whichever of those dates is earlier;
“quarter” in relation to an assessment period means a period in that year beginning on—
(c)1st January and ending on 31st March;
(d)1st April and ending on 30th June;
(e)1st July and ending on 31st August; or
(f)1st September and ending on 31st December;
“relevant payment” means either a student loan or an amount intended for the maintenance of dependants referred to in paragraph 73(7) or both.
(10) For the avoidance of doubt there must be included as income to be taken into account under sub-paragraph (1)—
(a)any payment to which paragraph 48(2) (payments not earnings) applies; or
(b)in the case of an applicant who is receiving support under section 95 or 98 of the Immigration and Asylum Act 1999 including support provided by virtue of regulations made under Schedule 9 to that Act, the amount of such support provided in respect of essential living needs of the applicant and the applicant’s dependants (if any) as is specified in regulations made under paragraph 3 of Schedule 8 to the Immigration and Asylum Act 1999.
Capital treated as income: persons who are not pensioners
52.—(1) Any capital payable by instalments which are outstanding at the date on which the application is made or treated as made, or, at the date of any subsequent revision or supersession, must, if the aggregate of the instalments outstanding and the amount of the applicant’s capital otherwise calculated in accordance with Chapter 7 of this Part exceeds £16,000, be treated as income.
(2) Any payment received under an annuity is to be treated as income.
(3) Any earnings to the extent that they are not a payment of income is to be treated as income.
(4) Any Career Development Loan paid pursuant to section 2 of the Employment and Training Act 1973 is to be treated as income.
(5) Where an agreement or court order provides that payments must be made to the applicant in consequence of any personal injury to the applicant and that such payments are to be made, wholly or partly, by way of periodic payments, any such periodic payments received by the applicant (but not a payment which is treated as capital by virtue of this Part), is to be treated as income.
Notional income: persons who are not pensioners
53.—(1) An applicant who is not a pensioner is to be treated as possessing income of which that applicant has deprived himself or herself for the purpose of securing entitlement to a reduction or increasing the amount of the reduction.
(2) Except in the case of—
(a)a discretionary trust;
(b)a trust derived from a payment made in consequence of a personal injury;
(c)a personal pension scheme, occupational pension scheme or a payment made by the Board of the Pension Protection Fund where the applicant has not attained the qualifying age for state pension credit;
(d)any sum to which paragraph 48(2)(a) of Schedule 9 (capital disregards: persons who are not pensioners) applies which is administered in the way referred to in paragraph 48(1)(a) of that Schedule;
(e)any sum to which paragraph 49(a) of Schedule 9 refers;
(f)rehabilitation allowance made under section 2 of the Employment and Training Act 1973;
(g)child tax credit;
(h)working tax credit; or
(i)any sum to which sub-paragraph (11) applies,
any income which would become available to the applicant upon application being made, but which has not been acquired by the applicant, is to be treated as possessed by the applicant but only from the date on which it could be expected to be acquired were an application made.
(3) Any payment of income, other than a payment of income specified in sub-paragraph (4), made—
(a)to a third party in respect of a single applicant or a member of the family (but not a member of the third party’s family) must, where that payment is a payment of an occupational pension, a pension or other periodical payment made under a personal pension scheme or a payment made by the Board of the Pension Protection Fund, be treated as possessed by that single applicant or, as the case may be, by that member;
(b)to a third party in respect of a single applicant or in respect of a member of the family (but not a member of the third party’s family) must, where it is not a payment referred to in paragraph (a), be treated as possessed by that single applicant or by that member to the extent that it is used for the food, ordinary clothing or footwear, household fuel or rent of that single applicant or, as the case may be, of any member of that family or is used for any council tax or water charges for which that applicant or member is liable;
(c)to a single applicant or a member of the family in respect of a third party (but not in respect of another member of that family) must be treated as possessed by that single applicant or, as the case may be, that member of the family to the extent that it is kept or used by that single applicant or used by or on behalf of any member of the family.
(4) Sub-paragraph (3) does not apply in respect of a payment of income made—
(a)under or by the Trusts, the Fund, the Eileen Trust, MFET Limited, the Skipton Fund, the Caxton Foundation or the Independent Living Fund (2006);
(b)pursuant to section 19(1)(a) of the Coal Industry Act 1994(4) (concessionary coal);
(c)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) of the Jobseeker’s Allowance Regulations 1996(5);
(ii)in a training scheme specified in regulation 75(1)(b)(ii) of those Regulations;
(iii)in the Intense Activity Period specified in regulation 75(1)(a)(iv) of those Regulations;
(iv)in a qualifying course within the meaning specified in regulation 17A(7) of those Regulations; or
(v)in the Flexible New Deal specified in regulation 75(1)(a)(v) of those Regulations;
(d)in respect of a person’s participation in the Work for Your Benefit Pilot Scheme;
(e)in respect of a person’s participation in the Mandatory Work Activity Scheme;
(f)in respect of an applicant’s participation in the Employment, Skills and Enterprise Scheme;
(g)under an occupational pension scheme, in respect of a pension or other periodical payment made under a personal pension scheme or a payment made by the Board of the Pension Protection Fund where—
(i)a bankruptcy order has been made in respect of the person in respect of whom the payment has been made or, in Scotland, the estate of that person is subject to sequestration or a judicial factor has been appointed on that person’s estate under section 41 of the Solicitors (Scotland) Act 1980(6);
(ii)the payment is made to the trustee in bankruptcy or any other person acting on behalf of the creditors; and
(iii)the person referred to in sub-paragraph (i) and any member of that person’s family does not possess, or is not treated as possessing, any other income apart from that payment.
(5) Where an applicant is in receipt of any benefit under the benefit Acts and the rate of that benefit is altered with effect from a date on or after 1st April in any year but not more than 14 days thereafter, the authority must treat the applicant as possessing such benefit at the altered rate from either 1st April or the first Monday in April in that year, whichever date the authority selects, to the date on which the altered rate is to take effect.
(6) Subject to sub-paragraph (7), where—
(a)an applicant performs a service for another person; and
(b)that person makes no payment of earnings or pays less than that paid for a comparable employment in the area,
the authority must treat the applicant as possessing such earnings (if any) as is reasonable for that employment unless the applicant satisfies the authority that the means of that person are insufficient for that person to pay or to pay more for the service.
(7) Sub-paragraph (6) does not apply—
(a)to an applicant who is engaged by a charitable or voluntary organisation or who is a volunteer if the authority is satisfied in any of those cases that it is reasonable for the applicant to provide those services free of charge; or
(b)in a case where the service is performed in connection with—
(i)the applicant’s participation in an employment or training programme in accordance with regulation 19(1)(q) of the Jobseeker’s Allowance Regulations 1996, other than where the service is performed in connection with the applicant’s participation in the Intense Activity Period specified in regulation 75(1)(a)(iv) of those Regulations; or
(ii)the applicant’s or the applicant’s partner’s participation in an employment or training programme as defined in regulation 19(3) of those Regulations for which a training allowance is not payable or, where such an allowance is payable, it is payable for the sole purpose of reimbursement of travelling or meal expenses to the person participating in that programme; or
(c)to an applicant who is participating in a work placement approved by the Secretary of State (or a person providing services to the Secretary of State) before the placement starts.
(8) In sub-paragraph (7)(c) “work placement” means practical work experience which is not undertaken in expectation of payment.
(9) Where an applicant is treated as possessing any income under any of sub-paragraphs (1) to (8), the foregoing provisions of this Part apply for the purposes of calculating the amount of that income as if a payment had actually been made and as if it were actual income which that applicant does possess.
(10) Where an applicant is treated as possessing any earnings under sub-paragraph (6) the foregoing provisions of this Part apply for the purposes of calculating the amount of those earnings as if a payment had actually been made and as if they were actual earnings which that applicant does possess except that paragraph 39(2) or 49(3) (calculation of net earnings of employed earners: pensioners and persons who are not pensioners, respectively) do not apply and that applicant’s net earnings are to be calculated by taking into account those earnings which that applicant is treated as possessing, less—
(a)an amount in respect of income tax equivalent to an amount calculated by applying to those earnings the basic rate of tax applicable to the assessment period less only the personal relief to which the applicant is entitled under sections 35 to 37 of Part 3 of the Income Tax Act 2007 (personal allowances) as is appropriate to the applicant’s circumstances; but, if the assessment period is less than a year, the earnings to which the basic rate of tax is to be applied and the amount of the personal relief deductible under this sub-paragraph is to be calculated on a pro rata basis;
(b)an amount equivalent to the amount of the primary Class 1 contributions that would be payable by the applicant under the SSCBA in respect of those earnings if such contributions were payable; and
(c)one-half of any sum payable by the applicant by way of a contribution towards an occupational or personal pension scheme.
(11) Sub-paragraphs (1), (2), (3) and (6) do not apply in respect of any amount of income other than earnings, or earnings of an employed earner, arising out of the applicant’s participation in a service user group.
Powers in section 14A of the LGFA 1992 may be used to confer power to require employers to provide information for these purposes.
2007 c. 3; the heading and subsection (1) of section 35 were amended by section 4 of the Finance Act 2012 (c. 14) (“2012 Act”); subsections (2) and (4) inserted by section 4 of the Finance Act 2009 (c. 10). In section 36, the heading and subsection (2) were amended by, subsection (1) substituted by, and subsection (2A) inserted by section 4 of the 2012 Act; subsection (2) has also been amended by S.I. 2011/2926 and section 4 of the Finance Act 2009. In section 37, the heading and subsection (2) were amended by, subsection (1) substituted by, and subsection (2A) inserted by section 4 of the 2012 Act; subsection (2) has also been amended by S.I. 2011/2926 and section 4 of the Finance Act 2009.