Currently adoption allowances are treated as income for IS purposes up to the level of the child personal allowance plus any disabled child premium and the rest is ignored. When IS claimants move over to Tax Credits in April - adoption allowance is ignored for the purpose of Tax Credits but will it still be treated as the parent's income in the same way for IS using the child credit amounts to determine the level. Client is concerned that she will be worse off when she moves to tax credits but my view is that her income will remain the same just coming from different sources. Any comments?
Elizabeth

I think that the Adoption Allowance will ignored entirely after April.

I'd be interested to know what other people think as I am not 100% sure. Unfortunately I can't find any amendments to the regulations.

I think, after looking at sch. 9 of the IS (Gen) Regs 1987, that para 25 (1) should be read with the effect of disregarding Adoption Allowances and para 25 (2) would have no relevance.

We are erring on the side of caution and assuming, until or if we receive notification otherwise, that the current rules regarding the treatment of adoption allowances will continue to apply to IS and ibJSA cases after April 2004, even if child dependants have transferred to CTC. We are clear that adoption allowances are disregarded for Tax Credit purposes. Pretty comfortable that they are disregarded for PC purposes. Not totally convinced, but desperate to be so, that they will be disregarded for HB/CTB for non IS/ibJSA claimants who have attained PC age. Yet another fine mess that the regulators have gotten us into!

The Adoption Support Services Guidance paragraphs 108 - 119, The benefits and tax credit systems (yes I know it's guidance) states the same but makes no mention of PC or claimants attaining PC age not in receipt of IS/ibJSA.

This was an obvious opportunity to simplify the benefits system, no affect of adoption allowances etc. on any benefits/Tax Credits, which wasn't taken and will have resulted in even more confusion for adopters. The Adoption guidance also makes it clear that LA's should ensure that adoptive families are aware of and taking advantage of all benefits etc. Hopefully this will help to ameliorate the aforementioned mess.

Many thanks

Shaun

Thanks for attempting to clear up the issue of Adoption Allowance and means-tested benefits. I think this will be an issue for those moving over to Tax Credits next year unless clear guidance is given on how adoption allowance is to be treated for the purpose of IS/(IB)JSA. I am still not comfortable about advising the client on the position - is there anyone else who can throw some light on this.
Thanks, Elizabeth

I have been working on the assumption that any adoption payment will be disregarded for CTC and for IS after the move to CTC in April, and only CB will be seen as income for IS purposes in these cases. I based this on my interpretation of IS schedule 9 25... and also on conversations I had some months ago with Gary Vaux who was working on the benefit implications of Adoption Support for the LGA. I do hope this is correct as our new financial assistance for adopters in Notts is designed on this premise. We are soon to be advertising for a specialist WRO on adoption issues to support adoption SWs and parents- is any one else doing anything similar?

I'm with Steve and Liz on this. On the present wording of para 25 to Schedule 9 we have this:

25(1) - disregard any payment made ... to the extent specified in (2).

25(2)(a) - cases of child's capital over £3,000 - the whole payment.

25(2)(b) - (non-capital cases) ignore any excess above the child's applicable amount plus any disabled child premium.

As things stand, under the new IS rules for dependants the amount for children, including disabled children, will be zero. So if para 25 stays unamended, then the whole amount of any payment in 25(1) will be ignored under 25(2), because the amount to be disregarded minus zero = that same amount, unchanged.

Jim

I'm still not confident on the post april effects. Are HB and CTB regs to be amended. They still have personal allowances and DCP for dependant children. If I follow the logic there would be an effect from Adoption Allowances on non IS/ibJSA Adopters but not those on IS/ibJSA. Also I would have more confidence if someone can point me to the amendments which remove the child dependant allowances and DCP from IS/ibJSA regs. These are still listed in this years draft benefits up rating order. Could this mean thatif the regs are not changed and applicable amounts continue to refer to child personal allowances and DCP, that the status quo will still apply to IS/ibJSA claimants and the impact of Adoption Allowances on their benefits? Hopefully I am talking out of the wrong orifice.

I am concerned that this will be a dogs beakfast and hence my deep rooted conservatism. Someone please convince me otherwise.

Many thanks

Shaun

Thanks Shaun for your comments. Like you I am still not clear about the situation post April 2004. If child personal allowances/disabled child premiums remain in the regulations how will Income Support treat these allowances when calculating entitlement to benefit. I have seen nothing to convince me that by not amending the regulations adoption allowances will be disregarded by default.

It has been suggested that not all IS/(ib)JSA claimants will move over to tax credits in April and the process may be staggered - this would lead to the current situation where the child allowances need to remain in the regulations until all claimants are on tax credits and there is no longer any amounts paid for children with IS/(ib)JSA.
If the intention was to remove them from April 2004 why include them in the uprating figures.

Elizabeth

A colleague has done a search and we think that we have found the relevant regulations. they are in The Social Security (Working Tax Credit and Child Tax Credit)(Consequential Amendments) Regulations 2003 SI 2003 No.455. These amend the Income Support(General) Regs.

They omit from the IS regs the amount in respect of young persons, family premiums and disabled child premium, enhanced disability premium (child). In Schedule 9 in income other than earnings they disregard Child Benefit and Child Tax Credit. Sub paragraph 2 of paragraph 25 is omitted and therefore Adoption Allowances and Residence Order allowances are disregarded.

If this is correct we are now checking to see when this will take effect. For those people already in receipt of CTC and claiming IS it appears to be the first day of the first benefit week after 6th April 2004. It should be the same for new claimants after 6th April. The issue appears to be with those who have not migrated from IS child dependants to CTC. As migration is likely to be delayed this could mean that this group does not benefit from this change as they should still receive IS for child dependants. In adoption cases it may make sense for people in this group to claim CTC before 6th April 2004.

There is still uncertainty for HB/CTB as child dependant additions etc remain and the above regs do not appear to have amended the equivalent HB/CTB regs on income other than earnings for adoption allowances etc.

As ever we would be happy if others read these regs and express their opinion.

Many thanks

Shaun

Thanks Shaun for your continued input - I will have a look at the regs you have identified but if it as you say then I am clear that the situation will be okay for those who transfer over on 6th April/make new claims, but if the migration of IS claimants is staggered over a period of months then we need to be identifying those who should request CTC claims before 6th April. The client we are advising is claiming IS at present and does not get CTC so it may be in her interest to request a claim for CTC now unless she has already been advised that she will move over to CTC on 6th April - I do not think she has received any notification to that effect.

We have seen a case today of someone who used to receive Income Support and Adoption Allowance but now receives Child Tax Credit. Her Income Support has ceased because the DWP are continuing to take the Adoption Allowance into account up to the level of the child elements, resulting in the Child Tax Credit wiping out the rest.

Having said that, she is over £20 a week better off under the new system, because the CTC is more than the Income Support she lost, but based on previous postings we're not sure whether the DWP are correct in their actions. They insist that they are, because as the child elements are still in place the same rules apply. If the regs referred to above come into force in April this will presumably then change and the client will be entitled to Income Support again.

For those claimants on IS who already receive CTC it should apply automatically from the first day of the first benefit week following April 6th 2004. However, I do not know if the DWP have highlighted these cases and I assume that Adoption Allowances are just recorded as other income. Therefore, we are not assuming that DWP systems will recognise that Adoption Allowances are to be ignored in full and payments adjusted accordingly. We are trying to find a claimant in this position and with their authorisation have the local DWP do a test run.

Many thanks

Shaun