Reply To: Income from capital (pensioner rules)


I agree: the new Reg 28(10) says that capital listed in Part 1 of Sched 5ZA is disregarded for the purposes of calculating income, full stop. But capital in Part II of the Schedule is only disregarded for the purposes of Reg 25(2), loosely speaking “tariff” income (even though it isn’t called that anymore). But then, Reg 25(2) excludes all capital disregarded under Sched 5ZA from tariff income in any case.

Meanwhile, Reg 25(1)(g) as amended says that real income from capital counts, unless it is disregarded under Sched 5ZA Part I only.

The Regs seem to be silent on any possible disregard of income from non-disregarded capital, a la working age. And yet in working age claims the “real” income from virtually all disregarded capital is taken into account (e.g. rent from tenants in disregarded property under 5ZA.2), but the pensioner Regs apparently disregard such income under Reg 25(1)(g). It’s all a*se about face.

So apparently any capital not disregarded under Sched 5ZA will be “treated as” tariff income under Reg 25(2), while the actual interest/dividend/rent from tenants or whatever will count as income as well, both at the same time.

I have said before that I sympathise with the people who have to draft these amendments. But with the best will in the world, this is garbage isn’t it?

I would suggest that what they actually wanted to do in 25(1)(g) was leave out the words “other than capital”. That would have achieved a more sensible result I think.