Backdated equal pay claims treated as income or capital

I have a client who has now retired and is claiming HB/CTR
she received a limp sum in settlement of equal pay which would exclude her from claiming HB.

Previous cases have been taken as income resulting in an overpayment of HB ............

can she claim HB/CTR based on her SRP only and have lump sum disregarded , she did not claim HB/CTR whilst in employment.

Steph F - 30 April 2015 08:39 AM

Previous cases have been taken as income resulting in an overpayment of HB ............

If memory serves, unless there is new case law on the issue, it counts as earnings as confirmed in this COA decision.

http://www.bailii.org/ew/cases/EWCA/Civ/2011/1155.html

Caveat: The LA *may* decide the income has morphed into capital after a period of time, but that’s another issue.

Thanks chacha

this was the comm decision I was using hoping we could get HB awarded.

I think the correct approach is the worst of both worlds:

- it counts as earnings retrospectively, and therefore cannot count as capital at the same time
- going forward it is no longer earned income, but remains in the claimant’s possession as capital

It is as if the claimant had received the income month by month all along and saved it up.  See CH/1561/2005 for a similar point where arrears of a state benefit counted as income for the backdated period and then as capital.  In that case the benefit was WFTC and the arrears were at least disregarded as capital for 52 weeks.  But capital from arrears of earnings I am afraid has no 52 week disregard and counts as capital immediately.  The Minter case tells us that the money is a payment of income, which means it falls to be taken into account as income: if it had been a payment of capital it would not have had any retrospective effect as income.  But even though it wasn’t a payment of capital at the point of receipt, it is now held in the form of capital because the claimant retains it beyond the end of the period in which it was income.

Anyone who has savings accumulated from income they have received over the years cannot have those savings disregarded just because they were originally received as payments of income.

I did have a look at para 8 of Schedule 4 to the HB(SPC) Regs, which says that any payment of earnings in respect of employment that ended before the HB claim is disregarded as earnings.  This really only has any practical effect by excluding PILON and holiday pay from income if you claim immediately after being paid off - otherwise all it’s doing is disregarding income for a period when you weren’t claiming HB in the first place, which is gloriously irrelevant.  But there is nothing to say such payments are disregarded as capital at all.

So I think what you have here is exactly what it appears to be at first glance: a claimant with excess capital.