How does the calculation of royalites and similar work for means-tested benefits?
I should know this, but I must admit I am not confident that I completely understand how the calculation of royalties and similar for means-tested benefits is applied.
A case example:-
My client is an actor. He receives £300 for a commercial shoot and a one off payment of £4000 as a usage fee if the commercial is broadcast for the next 6 months.
He is self-employed, most actors are. He is claiming ESA (support group) and is severely disabled + doing permitted work. DWP allow him to average his net profit and hours over the year.)
Assuming I cannot argue that the one off payment should be treated as capital, the regulations for IS, JSA and ESA all say the following on the calculation of earnings:-
(2)(a) Where the claimant’s earnings consist of any items to which this paragraph
Applies those earnings shall be taken into account over a period equal to such number
of weeks as is equal to the number obtained (and any fraction shall be treated as a
corresponding fraction of a week) by dividing the earnings by the amount of
[Welfare benefit - IS, JSA, ESA etc] which would be payable had the payment not
been made plus an amount equal to the total of the sums which would fall to be
disregarded from the payment under Schedule 7 (earnings to be disregarded) as is
appropriate in the claimant’s case;
(b) this paragraph applies to–
(i) royalties or other sums paid as a consideration for the use of, or the right
to use, any copyright, design, patent or trade mark; or
(ii) any payment in respect of any book registered under the Public Lending
Right Scheme 1982 or work made under any international public lending
right scheme that is analogous to the Public Lending Right Scheme 1982
where the claimant is the first owner of the copyright, design, patent or
trademark, or an original contributor to the book or work concerned.
Presuming it is the actors’ copyright that is being used and that he is an original contributor (whatever that means?) Does reg 2(a) mean the following calculation?
£4k / applicable amount £125.55 + disregard of £20.00 = 27.48 weeks?
And does that then mean that the actor will be treated as not entitled to payment for 27.48 weeks?
i’m not sure it is in fact a royalty properly so called.
and i should think Equity might be able to assist? They’ll surely know what it in fact is, and one assumes will have dealt with such issues before for other disabled actors….
It doesn’t sound like copyright to me. I would have thought that the firm that made the commercial would own the copyright rather than an actor and it would last for decades rather than 6 months. It seems more likely to me that it is just a (conditional) part of his fee.
Isn’t the reg you’re quoting for employed earnings, rather than self-employed?
Wouldn’t this be covered by the standard rules for caclulating the earnings of self-employed workers as per p.276/7 of CPAG 2017/18?
To answer questions -
Yes I am at Equity. I am the tax and welfare benefit adviser and my other colleagues are industrial (not welfare benefit advisers). I am consulting them on the issue of copyright with these sort of payments which is seems to be a key part of the regulation however that is not my question for the moment.
The regulation is for the calculation of self-employed earnings and I am afraid self-employed entertainers can no longer be treated as employed earners for benefits purposes for complex reasons that I wont go into.
I shouldn’t have included so much information about this particular case as it has misled - all I wanted to check was that the calculation of royalties or other sums in this regulation =
Amount of royalty etc divided by applicable amount + disregard = no of weeks that the royalty is taken into account for
Is that correct do you think?
And if so how much of the royalty it taken into account for the weeks - for example, would this chap be treated as earning £4k per week for the 27 or so weeks?
And yes I appreciate that if the income was just assessed as self-employment income, the assessment would probably be more favourable.
Leaving aside all the issues of copyright, permitted work and whether this is the correct calculation to use (all of which are valid issues), there is a worked example of the Regulation in action at DMG 50076.
It pretty much works how you describe.
doh! i hadn’t actually registered you were with equity!
however, i don’t think the situation you describe is copyright or royalty. your chap doesn’t own the copyright in the advert he appeared in. and he didn’t (on what you say) write the script/create anything
it is, however, certainly self employed earnings.
that is all super helpful thanks guys