PART 6 CALCULATION OF CAPITAL AND INCOME

CHAPTER 1 CAPITAL

45 Introduction
This Chapter provides for the calculation of a person’s capital for the purpose of section 5 of the Act (financial conditions) and section 8 of the Act (calculation of awards).

46 What is included in capital?
1 The whole of a person’s capital is to be taken into account unless—
(a) it is to be treated as income (see paragraphs (3) and (4)); or
(b) it is to be disregarded (see regulation 48).
2 A person’s personal possessions are not to be treated as capital.
3 Subject to paragraph (4), any sums that are paid regularly and by reference to a period, for example payments under an annuity, are to be treated as income even if they would, apart from this provision, be regarded as capital or as having a capital element.
4 Where capital is payable by instalments, each payment of an instalment is to be treated as income if the amount outstanding, combined with any other capital of the person (and, if the person is a member of a couple, the other member), exceeds £16,000, but otherwise such payments are to be treated as capital.

47 Jointly held capital
Where a person and one or more other persons have a beneficial interest in a capital asset, those persons are to be treated, in the absence of evidence to the contrary, as if they were each entitled to an equal share of the whole of that beneficial interest.

48 Capital disregarded
1 Any capital specified in Schedule 10 is to be disregarded from the calculation of a person’s capital (see also regulations 75 to 77).
2 Where a period of 6 months is specified in that Schedule, that period may be extended by the Secretary of State where it is reasonable to do so in the circumstances of the case.

49 Valuation of capital
1 Capital is to be calculated at its current market value or surrender value less—
(a) where there would be expenses attributable to sale, 10%; and
(b) the amount of any encumbrances secured on it.
2 The market value of a capital asset possessed by a person in a country outside the United Kingdom is—
(a) if there is no prohibition in that country against the transfer of an amount equal to the value of that asset to the United Kingdom, the market value in that country; or
(b) if there is such a prohibition, the amount it would raise if sold in the United Kingdom to a willing buyer.
3 Where capital is held in currency other than sterling, it is to be calculated after the deduction of any banking charge or commission payable in converting that capital into sterling.

50 Notional capital
1 A person is to be treated as possessing capital of which the person has deprived themselves for the purpose of securing entitlement to universal credit or to an increased amount of universal credit.
2 A person is not to be treated as depriving themselves of capital if the person disposes of it for the purposes of—
(a) reducing or paying a debt owed by the person; or
(b) purchasing goods or services if the expenditure was reasonable in the circumstances of the person’s case.
3 Where a person is treated as possessing capital in accordance with this regulation, then for each subsequent assessment period (or, in a case where the award has terminated, each subsequent month) the amount of capital the person is treated as possessing (“the notional capital”) reduces—
(a) in a case where the notional capital exceeds £16,000, by the amount which the Secretary of State considers would be the amount of an award of universal credit that would be made to the person (assuming they met the conditions in section 4 and 5 of the Act) if it were not for the notional capital; or
(b) in a case where the notional capital exceeds £6,000 but not £16,000 (including where the notional capital has reduced to an amount equal to or less than £16,000 in accordance with sub-paragraph (a)) by the amount of unearned income that the notional capital is treated as yielding under regulation 72.