Income from capital (pensioner rules)

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    I’m puzzled by what seems to be a discrepancy between the Regs and the guidance over the issue of actual (as opposed to tariff) income from capital for pensioners.

    Under the pensioner rules, capital is divided into three categories:
    · Capital that is not disregarded
    · Capital disregarded under part 1 of schedule 5ZA
    · Capital disregarded under part 2 of schedule 5ZA

    The regulations state that income from capital counts as income, with the exception of capital disregarded under part 1 of schedule 5ZA. See HB Regs 25(1)(g) and 28(10), CTB Regs 17(1)(g) and 20(10) – pensioner versions.

    However, the guidance says that income from capital should only be taken into account in respect of capital listed in part 2 of schedule 5ZA. See Pension credit handbook, part 2 para 290.

    The guidance makes more sense, because it seems unfair to count both real and tariff income from (non-disregarded) capital. But unless I’ve missed something, this is what the Regs seem to imply.

    Please tell me I’m wrong!


    I too am confused by this. As you say – the double counting scenario is prevented for capital disregarded in Part I of Schedule 5ZA by virtue of 25(1)(g) (as amended by SI2003/2275). For capital disregarded under Part II of 5ZA the double counting is prevented by Part II itself and the new para 23 of the Second Schedule (disregards for income other than earnings) as inserted by SI2003/2275. But I just can’t see where the double counting is prevented for non-disregarded capital.


    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.

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