My client and his wife both care for their disabled son.
My client owns and rents out eight properties from which he says he derives an income of £400 per week. His wife has no interest in the business and has no income of her own.

On the CA claim form it asks 'Do you or your partner rent out property which you own?'

Will my client's wife fall foul of the CA Earnings Rule even though she has no income of her own? And if so why is the rule here different to other types of earned income where it is only the income of the claimant that is relevant?

I've had similar cases to this.

My understanding is this. 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.

Your client's wife should be ok because if she does no work for the business and as she is not a partner deriving a share of the profit then she cannot be gainfully employed.

Regards
Paul