I have a client who is over 60 and has a younger wife and baby. They have moved out of a property she owns and into rented accommodation. The house is not on the market and they're looking at renting it out. They get Guarantee Credit.

Am I right in thinking that this should be treated as an increase in capital during the Assessed Income Period and that they do not have to inform PS of this. Meaning GC will not be reduced and that a claim for HB/CTB can be made as they are on GC. But that they will have to inform of rental income and this will affect GC.

Hi
I'm beginning to see more and more problems with operation of AIPs.
We are currently struggling with
- the decision maker's 'duty' to set an AIP (SPC Act sect 6)
- when aspects of the client's 'retirement provision' mean that an AIP can't be set (or is set for less than 5 years)
- when an AIP should be ended (PC regs 12)
and what all of this means for clients with other income (not retirement provision) that is variable. All the provisions for enabling the DM to not set a 5 year AIP involve fluctuations on retirement provision ...

look at my posting below on client entering care home during AIP

re your client's case - do they definitely have an AIP (because you can't set an AIP if one partner is under 60 - see PC reg 10) ?

I wonder what the LA will make of the HB claim - possibly tenancy set up to take advantage of HB?

alban

I don't think actual rental income from a second property counts as income, because from memory it is not on the "list".

Therefore you are left with deemed income from capital. Para 84002(4) of the DMG flags up the property is capital (unless disregarded etc).

So the value of the second home, after any allowable disregards/expenses etc will produce the assumed income. Pity the client's partner is under 60, because as Alban points out, there is no AIP. By the time the younger partner reaches 60, the AIP set then would include the assumed income from the second property, or the cash value, if by then it has been sold. Watch out for notional disposal.

The move may well take them off GC and therefore automatic HB/CTB. The value of the second property or its value if sold, will almost certainly mean no HB/CTB because of the £16,000 rule.

I hope this line of thinking is right!

Steve