Benefits letters
Terms: applicable amount, earned income, notional income from capital
What is an 'applicable amount'?
This is the amount of money the government says that you (and your partner and dependent children, if they live with you) need to live on. It is made up of a personal allowance for you and your partner, allowances for dependent children, and extra amounts (usually called premiums) for disability, age, single parents and families.
If your total income is below the applicable amount, then the maximum housing benefit or council tax support could be paid. You may also qualify for income support, income-based jobseeker's allowance, universal credit or guaranteed pension credit.
What does 'earned income' mean?
This is the average weekly amount you earn after deductions for income tax, national insurance and half of any pension contributions. We have to include any overtime and bonuses you receive with your pay.
If you are paid weekly, the average weekly amount you earn is calculated from your last five weeks earnings. If you are paid monthly, it is from your last two months earnings, and if you are paid fortnightly, it is from your last three fortnightly earnings.
What does 'notional income from capital' mean?
There are two rules regarding this, depending on how old you are:
- If you are of working age (aged 18 to below pensionable age), we will calculate this using £1 for every £250 of capital that you have that is over £6,000. For example, if you have £6,500 in your bank account, we will use £2 per week notional income. This is calculated by disregarding the first £6,000 and taking £1 per week for every £250 remaining (£500)
- If you are of pensionable age, we will calculate this using £1 for every £500 of capital that you have that is over £10,000. For example, if you have £8,000 in your bank account, then we would not take any notional income into account in the calculation
If you are in receipt of guaranteed pension credit, we will not take into account your capital.
These amounts are set by the government and are not at our discretion. We have to take all your capital into account, including cash you may have at home, and current accounts, even if they do not pay any interest.
Last updated: 09/05/2024 08:26
