Reply To: Capital on the edge of £16k


I think there is a difference between how you attribute income for income calculation purposes, and how you measure capital at the low point of the income cycle. I still think Lorraine’s approach is right even for income paid in arrears.

Take a payment of salary, for example, made on the final business day of the month in which it is earned. The person will live off that money for the next month, by which time there will probably be none left. I would say it only counts as capital if there is any of it left at the end of the period over which it is normally used for regular living costs.

However, when it comes to calculating that person’s income, the salary will be attributed to the month in which it was earned even though it was not paid until the end of that month.