I have a client who is in receipt of CA but is renting out a house for £465pm. He says he informed the CA unit and it was all investigated before he was awarded CA. Is it the case that income from renting a house is not counted as 'earnings' and thus does not take him over the earnings limit? I've checked CPAG and can't see it as earnings but surely this is a loophole?

Rental income as such is not earnings from gainful employment. The test is, is the carer in gainful employment. This is a question of fact.

If a person quite clearly runs a businss which invlolves him/her actively working, i.e spending time on paperwork, supervising staff etc, then the likelihood is is that s/he is gainfully employed and rental income will count as earnings.

If, on the other hand, a person merely rents a single property without actually operating a business and, let us say that the rent is paid straight into his/her bank acount by direct debit, then it is highly arguable that s/he can be said to be gainfully employed as s/he does no work. This is an argument that I have successfully used in the past.

However, as CG 058/92 makes clear, if you are a partner in a business and receive a share of the profit you may be classed as gainfully employed. But note that if you are merely an investor or share holder you may not be caught by this.

I'm not sure that on a site dedicated to welfare rights the word 'loophole' should be used.

I think loophole is the wrong term anyway...

£495 rental per month may seem a good income, but take away the mortgage and insurance payments, and the profit is probably next to nothing...

In Street v Mountford, Lord Templeman said “if Mr Street has succeeded, where owners have failed these past 70 years, in driving a coach and horses through the Rent Acts, he must be left to enjoy the benefit of his ingenuity unless and until Parliament intervenes”. Ljl is therefore, in a sense, in good company.

I understand the concern though but I wouldn’t worry too much. This is not new after all. CA is an earnings replacement benefit and the policy is to let certain classes of people who are currently unable to work for long recognized, prescribed reasons (temporary unemployment, sickness, caring, retirement) to claim a replacement benefit. That is why the emphasis is on gainful employment.

Having said that I wouldn’t use the word too freely though.

Ahhhhhh! Street v Mountford the bane of squatters.... allows a licensee to evict a trespasser. Less said about it the better.

Sounds like that brings back painful memories Martin! 1985, the heydays of Thatcherism when getting a beating (metaphorical or otherwise) from the authorities was a regular occurence. Ah! Exciting times. I'm getting all emotional now.

Apologies guys for the wording i used. Lesson learned. Thanks for input from everyone, much appreciated.

I have just had a call from a claimant who has had a CA review form that specifically asks about rental income, the last review (in 2005)made no mention of this- has there perhaps been a change of legislation or caselaw?

I don't think so. As far as I remember, they've always asked about rental income.