I have recently seen a couple both in their 70's who recive PC and are within an AIP.

They have both recently started part time work.

Section 12 of SPCR 2002 says

An assessed income period shall end at such time as-

(a)the claimant no longer satisfies a condition of entitlemet to state pension credit

and there is my problem, what exactly does this mean?

If you include their income from work they no longer qualify for savings credit as their income is too high.
Sec 1 SPCA 2002,Reg 2 (c) says the claimant has to satisfy the conditions in sec 3 (1) and (2) which is the income test for savings credit.
However, looked at in this way the receipt of a large amount of capital would increase the claimants qualifying income and I was under the impression that receipt of a large amount of capital would not bring an AIP to an end.

Can anyone help clarify this?

See section 7(3) and (6) of the SPCA. This says that retirement provision is 'deemed' during the AIP, but defines 'retirement provision' as being private pensions, annuities and tariff income. So earnings above the disregard level need to be taken into account at once. See SPCA s.9(5) and SPCR 12(a).

Jim

Thanks Jim