Income disregards
- Income that is wholly disregarded
- Income that is partially disregarded
- Earning disregards
- Earnings from before an application
Disregards are the part of an income that is not counted when we work out Pension Credit.
Disregards are calculated on a weekly basis.
Income that is wholly disregarded
The following are all wholly disregarded when working out your customer’s income.
Social Security benefits:
- Housing Benefit
- Council Tax Benefit
- Attendance Allowance (AA)
- Disability Living Allowance (DLA)
- Christmas Bonus
- Bereavement Payment
- these additions to industrial injury benefits:
- Constant Attendance Allowance
- Mobility Supplement
- Exceptionally Severe Disablement Allowance
- any Social Fund payment (including Winter Fuel Payments and Cold Weather Payments)
- Child Benefit
- Guardian’s Allowance
- Child’s Special Allowance
- dependency increases for anyone other than your customer or their partner,
- foreign benefits similar to those listed above.
Other types of income that are fully disregarded: [Legislation 10]
- War Widow’s Supplementary Pension
- these additions to War Disablement Pensions:
- Constant Attendance Allowance
- Mobility Supplement
- Severe Disablement Occupational Allowance
- dependency increases for anyone other than your customer or their partner
- income (other than social security or war pensions) received because your customer or their partner suffered a personal injury, including:
- payments from annuities set up under a structured settlement
- payments from annuities bought from a lump-sum compensation payment
- money from trust funds which were set up with a lump-sum compensation payment
- payments received from a trust fund which was not set up with a lump-sum compensation payment are not counted as long as they are made entirely at the trustees’ discretion and are for items other than food, ordinary clothing or footwear, household fuel or housing costs.
There is no limit to the amount that can be fully disregarded.
Income that is partially disregarded
Some types of income are partially disregarded when we work out Pension Credit. This means we ignore part of the income.
The following are partial disregards:
- The first £10 of income from:
- War Widow’s or Widower’s Pension
- War Disablement Pension
- Guaranteed Income Payments from the Armed Forces Compensation Scheme
- foreign payments equivalent to the three payment types listed above
- pensions paid by the German or Austrian governments to victims of Nazi persecution
- Widowed Parent’s Allowance,
- Widowed Mother’s Allowance.
Trust funds
- The first £20 of income received from a trust fund if payments are made entirely at the trustees’ discretion and cannot be disregarded in full (see Income that is wholly disregarded).
- If your customer has income from a trust (which cannot be disregarded in full) and other income in the list above (for example, a War Pension), no more than £10 of the money from the trust can be disregarded.
Income from tenants and lodgers
- The first £20 a week of rent paid to your customer if they let part of their home to a tenant is ignored [Reference 5d]. If there are separate tenancy agreements with more than one tenant, the first £20 a week of the rent from each tenancy is ignored.
- The first £20 a week plus half the rest of the money received if your customer has a lodger (or boarder) living in their home is ignored [Reference 5e]. If there is more than one lodger, this part of the amount received from each lodger is ignored.
- The amount that is ignored is on top of any disregards from other types of income.
If anyone else lives in your customer’s home and pays them for their living costs and accommodation (for example, an adult son or daughter), these payments will not count as income. However, there may be a deduction from any extra amount received for housing costs. (How do we work out housing costs?).
Home income plans
If your customer has released equity from their home to buy an annuity and is paying interest on the loan they took out to do this, part of the annuity income (equal to the amount of interest being paid) may be ignored.
Earning disregards
The amount of earnings disregarded depends on whether your customer:
- receives certain benefits
- is blind
- is a carer
- is a lone parent,
- works part-time in certain special occupations.
The amount of earnings ignored in the Pension Credit calculation is on top of any disregards on other types of income.
Normal disregards
The first £5 of earnings from work is ignored in most cases. For couples, the first £10 of joint earnings is ignored.
Higher disregards
There is a higher earnings disregard of £20 for some people. For some couples, the first £20 of joint earnings is ignored.
The £20 disregard applies when:
- your customer is a lone parent (does not have a partner and is responsible for a child who lives with them)
- your customer or their partner get any of these benefits:
- Attendance Allowance
- Disability Living Allowance
- long-term Incapacity Benefit(IB)
- Severe Disablement Allowance
- Mobility Supplement
- the disability or severe disability element of Working Tax Credit
- Employment and Support Allowance.
- your customer or their partner are registered blind
- your customer gets the extra amount for caring responsibilities because they (or their partner) are a carer,
- your customer or their partner have earnings from one of these special occupations:
- part-time firefighter
- member of the Territorial Army or the reserve forces
- lifeboat crew member or someone manning or launching a lifeboat,
- auxiliary coastguard involved in coast rescue duties.
Special rules
There are special rules for people getting £20 of their (or their partner’s) earnings disregarded either when they were getting Income Support, income-based Jobseeker’s Allowance or income-related Employment and Support Allowance in the eight weeks before they started to get Pension Credit or when they reached State Pension age.
The £20 disregard will continue to apply as long as there are no gaps of more than eight weeks in either the employment or their entitlement to Pension Credit.
The maximum amount that we can ignore from a single person’s earnings is £20.
The maximum amount that we can ignore for a couple if any of these rules apply to one or both of them, is also £20. [Legislation 18]
Earnings from before an application
If your customer stopped work (whether employed or self-employed) before their Pension Credit started, any payments they get for this work (except royalty payments or Public Lending Rights) will be ignored completely.
