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Incapacity Benefit is to be replaced by Employment and Support Allowance:
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Financing Residential Care
The main government policy document on the management and delivery of
community care services is People First
– Community Care in Northern Ireland in the 1990s. Legislation governing provision of
community care services includes the Health
and Personal Social Services (NI) Order 1972, as amended, the Health and Personal Social Services (NI) Order 1991, the Health
and Personal Social Services (NI) Order 1994. Regulations specifically covering the
issue of financing residential care are to be found in the Health and Personal Social Services (Assessment of Resources)
Regulations (NI) 1993, as amended, the Income
Support (General) Regulations (NI) 1987, as amended, the State
Pension Credit Act 2002, the State
Pension Credit Regulations 2002, the State
Pension Credit Regulations (NI) 2003 and the State
Pension Credit (Miscellaneous Amendments) Regulations (NI) 2004. Guidance on charging for residential care is continued in the Charging for Residential Accommodation Guide (CRAG), which is issued by the Department of Health, Social Services & Public Safety (DHSS&PS) and is regularly updated.
The cost of residential care is such that
most people will at some point in their lives require assistance from the Social
Security Agency (SSA), social services or both in paying care fees. When a
person is assessed as requiring residential care, s/he may be vulnerable and
worried as to how the care fees will be paid. S/he may require detailed advice
on what will happen to her/his social security benefits (if s/he is receiving
any) and her/his assets including savings and the home.
Once it has been established that a person requires residential care, a financial assessment must be carried out, in accordance with the Health and Personal Social Services (Assessment of Resources) Regulations (Northern Ireland) 1993 as amended, (HPSS'93 Regs) to determine the level of contribution, if any, which s/he must make towards the cost of her/his care. The financial assessment looks at the person's income and capital. The HPSS'93 Regs contain fixed capital limits which must be applied in assessing a person's eligibility for assistance with fees. Where a person falls within the capital limits for the purposes of obtaining assistance with residential care fees, the trust will look at her/his income to determine whether or not assistance will be provided. The trust will take into account most income including pensions and social security benefits. Exact details of the income taken into account can be obtained from Law Centre (NI) on request. Whether or not a person receives social security benefits for the time s/he is in care is of great importance to social services staff. If income from those benefits is maximised, there is less reliance on funding from the trust. Income Support and Pension Credit (PC) are
the benefits paid to people with a low income who are not able to work and who
satisfy certain conditions. Since 6
October 2003, a person over 60 claims PC. There
is one exception. A male aged 60 to
65 may be able to claim Income-based Jobseeker's Allowance (JSA(lB)) instead of
PC. Some people will become entitled to Income
Support or PC for the first time when they enter residential care whilst others
will find that the amount of Income Support or PC they receive changes. From
social services point of view, it is important that a person’s entitlement to
Income Support or PC is maximized in order that as much assistance as possible
is received from the SSA towards paying residential care fees. The level of Income Support or PC to which
a person is entitled varies according to the length of time spent in care and,
until recently, the setting in which the care was being provided, ie an
independent or a trust home. This section of the notes deals with a person’s entitlement to Income Support or PC whilst in residential care and looks at the rules which the SSA applies in determining that entitlement. PC is a means tested benefit for people
over 60. It consists of two elements:
A person may be entitled to either the
guarantee credit or savings credit or both. 1.1 Capital rules There is no upper capital limit for PC and
capital below £6,000 (£10,000 if resident in a care home) is ignored
altogether. A person who has capital above £6,000 (or £10.000 if in a care
home) will be treated as having a deemed income of £1 for every £500, or part
of £500, by which her/his capital exceeds £6,000 (or £10.000, if in
residential care). 1.1.1 What counts as capital? The term capital is not defined in PC
regulations. However, it can be distinguished from income because a capital
payment is a lump sum or one off payment made without being tied to a period and
not intended to form part of a series of payments. Savings count as capital.
This includes money in a bank or building society, cash at home, shares and unit
trusts. Fixed term investments are taken into account unless the money is
unobtainable. An investment which can be realised before the end of a term,
albeit with a loss of interest, is taken into account. Money or other assets
held on trust are taken into account in certain circumstances where the person
has beneficial use of the money or asset. The beneficiary of a non-discretionary
trust who can obtain the money or asset at any time will have this counted in
full as capital. The rules in relation to discretionary
trusts are significantly different. Where payments from the trust fund can only
be obtained at the discretion of trustees, the full amount is normally ignored
as a capital asset. However, payments received from the trust fund will normally
be counted in full, either as income or capital, depending on the nature of the
payment. Some payments may be disregarded in full in certain circumstances. Trust funds from personal injury
compensation are ignored as capital, although payment out of such funds may
count either as income or capital depending on the nature of the payment. A
person who is holding an asset or money in trust as a trustee will not have this
treated as capital providing s/he has no beneficial interest in the trust.
Property and land generally come within the definition of capital but in some
circumstances the value of these can be disregarded. 1.1.2 When is capital disregarded? There is a range of circumstances where
capital is ignored for the purposes of calculating entitlement to PC. The most
relevant of these for a person entering residential care is usually when the
value of the home is ignored. 1.1.2.1 The home The term home includes the garage, garden,
outbuildings, together with any land or other premises which are not occupied,
but which it is unreasonable to sell separately. Whilst a person is living in
her/his own home in the community, the value of the home is ignored as a capital
asset. However, when a person enters residential care permanently, s/he is no
longer treated as occupying the home and treatment of the property will depend
on who is left in occupation. If a partner (including any person treated
as a former partner for PC purposes because the person claiming has gone into
residential care) or a relative who is aged 60 or over or is incapacitated
remains at home, the value of the house is ignored. Incapacitated is not
defined, but guidance suggests that this includes people getting an incapacity
or disability benefit. If the home is put up for sale, the value
of the property is ignored for six months from the date reasonable steps were
taken to dispose of the property. This period can be extended where it is
considered reasonable in the circumstances. However, once the home is sold, the
proceeds will be treated as part of the capital of the person claiming. There are other circumstances where the
value of the home will be ignored, but these will rarely be relevant to a person
moving into residential care. 1.1.2.2 Other capital In particular circumstances, other capital
can be ignored. This includes personal possessions unless bought in order to
claim or increase entitlement to Pension Credit, tax rebates, arrears of a
number of social security benefits (ignored for up to a year), and the surrender
value of any life assurance, endowment policy or annuity. Any interest in property which a person
will or may possess in the future, but does not possess at the time of
assessment, is generally ignored as capital, unless the future interest is land
or premises which have been let to tenants, in which case it is taken into
account. 1.1.3 Valuation of capital Under Regulation 19.1 of the State Pension
Credit Regulations 2002, capital is valued on the basis of its current market
value or surrender value less expenses attributable to sale and any debts
secured on the asset eg an outstanding mortgage. 1.1.4
Joint own Regulation 23 of the State Pension Credit
Regulations 2002 sets out that, if a capital asset is jointly owned, each person
is treated as owning an equal share of the asset until such times as the asset
is sold and the person is in possession of her/his actual share. For example,
two people who own a home with one having a three quarters share and the other a
one quarter share will be treated as having a half share each. This potentially
grossly unfair rule, which applies regardless of the legal and equitable
position, was designed to simplify the valuation of joint assets. The value of
that half share is then relevant for the purposes of PC. The value of a half share of a home was
considered in the English Court of Appeal decision of Palfrey
v CAO (The Times, 17 Feb, 1995). The case related to an application for
Income Support where one of two joint owners of a property went into residential
care and the other was unwilling to vacate the property. The Court of Appeal
accepted that the value of a half share in the property would be little or
nothing since the prospect of finding a willing buyer would be negligible. The
government then attempted to amend the law to allow the market value of a
jointly owned capital asset to be calculated as though the interest is solely
owned by the person claiming and no other joint owner occupies the dwelling.
However, subsequent cases overturned the amended regulations as unlawful
and therefore the current position is that the value given to a person’s share
of jointly owned property should be what a willing buyer would pay for that
share of the property which may be negligible. 1.1.5 Deprivation Regulation 21(1) SPC Regs 2002 provides
that a person who deliberately deprives her/himself of an asset in order to
secure entitlement or increase the amount of PC payable will be treated as still
possessing the asset, ie having notional capital. A number of narrow and
specific exceptions apply which will almost never be relevant to residential
care situations. Where notional capital is assumed, a detailed formula is
contained in Regulation 21(1) SPC Regs 2002 to diminish such notional capital. The key question which determines whether
this regulation should apply is that of motive: what has been the reason behind
the person’s decision to get rid of an asset? The onus of proof in
establishing deliberate deprivation of an asset rests with the decision maker. The relevant caselaw is contained in cases
related to Income Support. In R(SB) 40/85,
a test called the significant operative purpose test was devised to determine
motive. This test suggests that a subsidiary motive to obtain benefit would be
sufficient to constitute deliberate deprivation. It was suggested that if
obtaining Income Support was a foreseeable consequence of getting rid of assets
then, in the absence of other evidence, this could be enough to establish
deprivation. This view was softened in CIS
124/1990 where it was held that a person must actually know of the capital
limits for the deprivation rules to apply. Moreover, in R(SB) 9/91, a Commissioner held that there must be a positive
intention to obtain benefit and that it was not sufficient that this was merely
a natural consequence of a transfer of an asset.
In Northern Ireland, in C 3/92(IS), a Commissioner considered the position where a transfer
of property had commenced in 1990 but, due to complications and litigation, was
not completed until some years later, by which time the person had entered a
nursing home. The Commissioner held that the original intention of transferring
the property was relevant and that Regulation 51 did not apply. The pitfalls of the deprivation of capital
rules were illustrated in the case of R
1/92(IS), a PC relaxes Income Support rules relating
to notional capital. In Income
Support, individuals may be treated as if they still possess capital in
circumstances where they have deliberately deprived themselves of it in order to
maximise their benefit entitlement. PC
specifies circumstances in which this would not apply.
For example, individuals who choose to use their savings to reduce or
clear a debt are not treated as having deliberately deprived themselves to
maximise entitlement. 1.2 Calculating Pension Credit 1.2.1 Guarantee credit The guarantee credit is calculated in
three steps. Calculate:
1.2.1.1 Step one: appropriate minimum
guarantee A person’s appropriate minimum guarantee
represents the minimum amount of income that the government believes a person
should have to live on each week. It aims to ensure that the weekly income of
all those entitled is brought up to a minimum level. The exact figure depends
upon a person’s marital status, whether s/he is part of a couple, any
disabilities, caring responsibilities and eligible housing costs. This figure
is made up of:
The standard minimum guarantee amounts are
as follows. Amount
paid Single person
£119.05 Couple
£181.70 The additional amounts are as follows.
This is
payable when:
If a person entering
residential care has a partner and they both satisfy the rules, they will each
receive the additional amount. If a partner is not in receipt of Attendance
Allowance or Disability Living Allowance (DLA) higher or middle rate care
component but is registered blind or if only one member of the couple has a
carer receiving CA, one person may receive the additional amount. Where one
member of a couple goes into residential care, the claim is separated. If the
person claiming is going into care and is getting Attendance Allowance or DLA
higher/middle rate care component, s/he will qualify for a severe disability
additional amount during the first four weeks in care.
After four weeks, Attendance Allowance or DLA care component will cease
and entitlement to a severe disability additional amount ends. Amount
paid Single person
£48.45 Couple - one qualifies £48.45 Couple - both qualify
£96.90
A person will qualify for this additional
amount if s/he or her/his partner is in receipt of CA or is entitled to and
would be in receipt of CA but for the fact that s/he is in receipt of a benefit
which overlaps with CA. If a person has a partner who also receives CA, then the
additional carer’s amount is awarded twice. When a person’s entitlement to
CA ends, the carer’s addition will continue for eight weeks. Amount
paid
£27.15
When a person enters
residential care on a temporary or respite basis, s/he may still receive an
amount in her/his PC in respect of her/his housing costs for her/his home in the
community. However,
when a person enters permanent residential care, s/he loses the entitlement to
housing costs.
Where a person who was in receipt of
Income Support or JSA(IB) on 5 October 2003 was transferred to PC, to ensure
that s/he would not be disadvantaged, the minimum guarantee amount includes a
transitional amount if the Income Support or JSA(IB) exceeded the appropriate
minimum guarantee of that person. 1.2.1.2 Step 2: Income Income is calculated
on a weekly basis and almost all income which a person has will be taken into
account. For a couple, both
partners' income is added together when calculating entitlement unless they are
no longer living in the same household in which case each partner is treated
separately. Some benefits are
counted in full as income, eg Retirement Pension and CA. Some are fully ignored
eg Attendance Allowance, DLA and Social Fund payments. Some are partially
disregarded eg War Widow(er)’s Pension and War Disablement Pension. Charitable and
voluntary payments, if not ignored in full, are usually partially disregarded. Tariff income from capital is calculated
at the rate of £1 for each £500 (or part thereof).
This is more generous than the rules for Income Support.
The period for which income is assessed is also different.
PC rules enable certain types of income
(retirement provision) to be treated as remaining the same for an assessed
income period of up to five years (or seven years if a person transferred onto
PC from Income Support on 6 October 2003 and the person or her/his partner was
65 on or before that date). The assessed income period will not be applied if
one member of the couple is under 60 or the retirement provision has temporarily
stopped. Retirement provision is defined as:
Any increases or subsequent receipt of
retirement provision will not affect entitlement during the assessed income
period. The claim will be reassessed at the end of the assessed income period
and any income adjustments (including that from retirement provision) will be
applied in the following assessed income period. However, any decreases or
cessation of retirement provision should be notified and, where necessary,
entitlement will be adjusted accordingly. If a person is in receipt of PC, the
assessed income period will end if s/he is provided with accommodation in a care
home on a permanent basis. All other changes in circumstances should
be notified to the Pension Credit Office as soon as possible. If a person fails
to notify a change of circumstances, an overpayment could occur. 1.2.1.3 Step 3: Compare The amount of guarantee credit a person
receives will be the appropriate minimum
guarantee figure less any relevant income.
If the income figure is above the appropriate minimum guarantee figure,
the person will not qualify for any guarantee credit but might qualify for
savings credit. 1.2.1.4 Case example Ms C is 75 years of age and a widow. She
receives a state pension of £87.30, occupational pension of £30.00 and
Attendance Allowance at the higher rate. She lives alone. Ms C is now going into
care permanently. Ms C currently lives in Housing Association accommodation and
has savings of £11,500. Her entitlement to PC standard minimum guarantee will
be as follows. Entitlement
for first four weeks in care
Entitlement to
guarantee credit is £47.20. Entitlement
after four weeks
Ms C is no longer in receipt of severe
disability allowance and is not
entitled to guarantee credit because her income exceeds her appropriate minimum
guarantee. 1.2.2 Savings credit Calculating savings credit is slightly
more complicated than calculating guarantee credit. The savings credit is
calculated in the six steps outlined below:
1.2.2.1 Step 1: Income This is calculated in the same way as the
income for guarantee credit. 1.2.2.2 Step 2: appropriate minimum
guarantee This is calculated in the same way as for
guarantee credit 1.2.2.3 Step 3: qualifying income A person’s qualifying income is
calculated by taking her/his total income less:
1.2.2.4 Step 4: select relevant savings
credit threshold The current savings credit thresholds are:
1.2.2.5 Step 5: compare qualifying
income with savings credit threshold To qualify for a savings credit, a person
must have qualifying income above the savings credit threshold. Compare the qualifying income (step 3)
with the savings credit threshold (step 4). Where a person has qualifying income below
the savings credit threshold then s/he will have no entitlement. Where a person has qualifying income in
excess of the savings credit threshold then calculate 60% of the excess. The maximum amount of savings credit a
person can receive is:
If the figure calculated (ie 60% of the
excess) is above the relevant maximum then the figure is capped at the maximum
amount of savings credit. The figure calculated here, whether it is
capped or not, represents the person’s maximum savings credit entitlement. 1.2.2.6 Step 6: compare income with
appropriate minimum guarantee Where a person’s income (step 1) is less than the appropriate minimum guarantee (step 2) s/he will
receive a savings credit equal to the amount calculated at step 5. Where a person’s income (step 1) is more than the appropriate minimum guarantee (step 2) then deduct the
appropriate minimum guarantee from the income. Calculate 40% of the excess and
then deduct this figure from the amount calculated at step 5.
This will be the amount of savings credit a person will be entitled to. Where the figure calculated (ie 40% of the
excess) is more than the figure calculated in step 5 then there is no
entitlement to savings credit. 1.2.2.7 Case example Remember Ms C. Her savings credit
entitlement for the first four weeks in care is calculated as follows:
Step
3: Qualifying income In this instance, there are no deductions
and Ms C’s qualifying income figure is the same as her total income.
Step 4:
relevant savings credit threshold
Step 5: compare qualifying income with
savings credit threshold
This is capped at the maximum savings
credit of £19.05. Step
6 Compare total income with appropriate minimum guarantee Because Ms C’s income of £120.30 is
less than her appropriate minimum guarantee of £167.50, she is entitled to
maximum savings credit. Therefore
the figure calculated at step 5, £19.05, represents her entitlement to savings
credit. For her first four weeks in residential
care, Ms C is entitled to guarantee credit of £47.20 plus savings credit of £19.05,
a total PC entitlement of £66.25. Her income for these first four weeks is
made up of State Pension of £87.30, Occupational Pension of £30, PC of £66.25
and Attendance Allowance of £64.50, a total of £248.05. After four weeks in care Ms C’s Attendance Allowance will cease
after four weeks in residential care, which, when calculating her entitlement to
guarantee credit, will remove her entitlement to the additional amount for
severe disability. Her appropriate
minimum guarantee will then drop by this amount, making her appropriate minimum
guarantee less than her income. Therefore,
after four weeks in care, Ms C is no longer entitled to guarantee credit. As Ms C’s income is now more than her
appropriate minimum guarantee (£119.05), a 40% taper must be applied to assess
whether she remains entitled to savings credit. 40%
taper Deduct her
new appropriate guarantee figure from her qualifying income.
After
four weeks in care, Ms C remains entitled to savings credit of £18.55. Her income now consists of State Pension
£87.30, Occupational Pension of £30 and PC of £18.55, a total of £135.85. 1.2.4 Temporary or respite care and
Pension Credit For couples where one is in care PC is calculated and paid at the couple rate. This means that, on the face of it, they now receive less benefit than younger people who, if on Income Support, are treated as two single people when one is in care. Trusts are therefore required to exercise discretion to ensure that the partner at home has sufficient income for her/his needs. 2.1 The capital rules In order for a person to receive Income
Support, s/he must have a low level of income and capital below specified
limits. The capital limits are different for people living in the community from
those living in residential care. The rules on capital are contained in
Regulations 45-53 and Schedule 10 of the Income Support (General) Regulations
(NI) 1987 as amended (Income Support Regulations).
A person living in the community will not
be entitled to Income Support if s/he and/or partner have capital in excess of
£16,000. Capital of up to £6,000 is completely ignored for Income Support
purposes. Capital of between 6,000.01 and £16,000 will be assumed to generate a
tariff income which will be added to the other income which a person has (£1
for every £250 or part thereof). When a person enters residential care on a
temporary basis, the same capital limits are applied. Note:
A person cannot claim Income Support if aged 60 or over (s/he should claim
Pension Credit instead), although if s/he has a partner aged under 60, the
partner can claim Income Support for both. When a person enters residential care
permanently, the limits change. Capital worth up to £10,000 is ignored
completely, capital of between £10,000.01 and £16,000 generates tariff income
and capital of above £16,000 means that s/he will not receive Income Support. The capital limits applied by the SSA
determine a person's eligibility for Income Support. Social services apply
different capital rules to determine whether or not a person is eligible for
assistance with residential care fees. Both members of a couple usually have
their capital added together when assessing entitlement to Income Support.
However, when one member of a couple goes into residential care permanently,
both partners are treated as separate people for Income Support. The value of
the joint capital is divided and one partner's capital is ignored when
calculating the other partner's entitlement. Note:
Recent case law has suggested that, even if both members of a couple go
into care permanently and are sharing a room in the same care home, they should
not be treated as a couple but rather as separate individuals. The Social
Security Commissioners have taken the view that an essential attribute of a
household is a domestic establishment and that, if the degree of independence
and self sufficiency falls below a certain level, there is no longer a domestic
establishment and therefore no longer a household. This is particularly
important where both members of a couple have capital which, when added
together, prohibits them from receiving Income Support. If the members of a
couple are to be treated separately, then their capital will not be added
together and one or other, or both of them, may then qualify for Income Support.
2.1.1 What counts as capital? Capital is not defined in the Income
Support Regulations. However, it can be distinguished from income because a
capital payment is a lump sum or one off payment made without being tied to a
period and not intended to form part of a series of payments. Savings count as capital. This includes
money in a bank or building society, cash at home, shares and unit trusts. Fixed
term investments are taken into account unless the money is unobtainable. An
investment which can be realised before the end of a term, albeit with a loss of
interest, is taken into account. Money or other assets held on trust are taken
into account in certain circumstances where the person has beneficial use of the
money or asset. The beneficiary of a non-discretionary trust who can obtain the
money or asset at any time will have this counted in full as capital. The rules in relation to discretionary
trusts are significantly different. Where payments from the trust fund can only
be obtained at the discretion of trustees, the full amount is normally ignored
as a capital asset. However, payments received from the trust fund will normally
be counted in full, either as income or capital, depending on the nature of the
payment. Some payments may be disregarded in full in certain circumstances. Trust funds from personal injury
compensation are ignored as capital, although payment out of such funds may
count either as income or capital depending on the nature of the payment. A
person who is holding an asset or money in trust as a trustee will not have this
treated as capital providing s/he has no beneficial interest in the trust.
Property and land generally come within the definition of capital but in some
circumstances the value of these can be disregarded. 2.1.2 When is capital disregarded? There is a range of circumstances where
capital is ignored for the purposes of calculating entitlement to Income
Support. The most relevant of these for a person entering residential care is
usually when the value of the home is ignored. 2.1.2.1 The home The term home includes the garage, garden,
outbuildings, together with any land or other premises which are not occupied,
but which it is unreasonable to sell separately. Whilst a person is living in
her/his own home in the community, the value of the home is ignored as a capital
asset. However, when a person enters residential care permanently, s/he is no
longer treated as occupying the home and treatment of the property will depend
on who is left in occupation. If a partner (including any person treated
as a former partner for Income Support purposes because the person claiming has
gone into residential care) or a relative who is aged 60 or over or is
incapacitated remains at home, the value of the house is ignored. Incapacitated
is not defined, but guidance suggests that this includes people getting an
incapacity or disability benefit. If the home is put up for sale, the value
of the property is ignored for six months from the date reasonable steps were
taken to dispose of the property. This period can be extended where it is
considered reasonable in the circumstances. However, once the home is sold, the
proceeds will be treated as part of the capital of the person claiming. There are other circumstances where the
value of the home will be ignored, but these will rarely be relevant to a person
moving into residential care. 2.1.2.2 Other capital In particular circumstances, other capital
can be ignored. This includes personal possessions unless bought in order to
claim or increase entitlement to Income Support, tax rebates, arrears of a
number of social security benefits (ignored for up to a year), and the surrender
value of any life assurance, endowment policy or annuity. Any interest in property which a person
will or may possess in the future, but does not possess at the time of
assessment, is generally ignored as capital, unless the future interest is land
or premises which have been let to tenants, in which case it is taken into
account. 2.1.3 Valuation of capital Under Regulation 49 of the Income Support
Regulations, capital is valued on the basis of its current market value or
surrender value less expenses attributable to sale and any debts secured on the
asset eg an outstanding mortgage. 2.1.4
Joint ownership of capital Regulation 52 of the Income Support
Regulations sets out that, if a capital asset is jointly owned, each person is
treated as owning an equal share of the asset until such times as the asset is
sold and the person is in possession of her/his actual share. For example, two
people who own a home with one having a three quarters share and the other a one
quarter share will be treated as having a half share each. This potentially
grossly unfair rule, which applies regardless of the legal and equitable
position, was designed to simplify the valuation of joint assets. The value of
that half share is then relevant for the purposes of Income Support. The value of a half share of a home was
considered in the English Court of Appeal decision of Palfrey
v CAO (The Times, 17 Feb, 1995) where one of two joint owners of a property
went into residential care and the other was unwilling to vacate the property.
The Court of Appeal accepted that the value of a half share in the property
would be little or nothing since the prospect of finding a willing buyer would
be negligible. The government then attempted to amend the law to allow the
market value of a jointly owned capital asset to be calculated as though the
interest is solely owned by the person claiming and no other joint owner
occupies the dwelling. However,
subsequent cases overturned the amended regulations as unlawful and therefore
the current position is that the value given to a person’s share of jointly
owned property should be what a willing buyer would pay for that share of the
property which may be negligible. 2.1.5 Deprivation of capital Regulation 51 provides that a person who
deliberately deprives her/himself of an asset in order to secure entitlement or
increase the amount of Income Support payable will be treated as still
possessing the asset, ie having notional capital. A number of narrow and
specific exceptions apply which will almost never be relevant to residential
care situations. Where notional capital is assumed, a detailed formula is
contained in Regulation 51A to diminish such notional capital. The key question which determines whether
this regulation should apply is that of motive: what has been the reason behind
the person’s decision to get rid of an asset? The onus of proof in
establishing deliberate deprivation of an asset rests with the decision maker.
In R(SB) 40/85, a test called the significant operative purpose test
was devised to determine motive. This test suggests that a subsidiary motive to
obtain benefit would be sufficient to constitute deliberate deprivation. It was
suggested that if obtaining Income Support was a foreseeable consequence of
getting rid of assets then, in the absence of other evidence, this could be
enough to establish deprivation. This view was softened in CIS
124/1990 where it was held that a person must actually know of the capital
limits for the deprivation rules to apply. Moreover, in R(SB) 9/91, a Commissioner held that there must be a positive
intention to obtain benefit and that it was not sufficient that this was merely
a natural consequence of a transfer of an asset.
In Northern Ireland, in C 3/92(IS), a Commissioner considered the position where a transfer
of property had commenced in 1990 but, due to complications and litigation, was
not completed until some years later, by which time the person had entered a
nursing home. The Commissioner held that the original intention of transferring
the property was relevant and that Regulation 51 did not apply. The pitfalls of the deprivation of capital
rules were illustrated in the case of R
1/92(IS), a Many attempts to protect or preserve
future entitlement to Income Support run the risk of falling foul of Regulation
51. Pragmatically, the earlier the transfer, the lower the risk. Nonetheless,
the legal test is one of motive for transferring property or other assets and
not timing. 2.2 The income rules If a person comes within the capital
limits for Income Support purposes, the SSA will look at her/his income to
ascertain what level of Income Support s/he will receive (if any). The amount of
Income Support payable is calculated by subtracting a person’s resources from
her/his needs. 2.2.1 Calculating Income Support The amount of Income Support a person
receives depends on her/his needs, called the applicable amount, and on how much
income or capital s/he has. An applicable amount is made up of three
elements: personal allowances, premiums and housing costs (owner occupiers). 2.2.1.1 Personal allowances These are fixed amounts to cover living
expenses which are uprated by the government each year.
The amount paid depends on age and on whether single or in a couple. The main personal allowances relevant to
residential care are:
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