Upper Tribunal Administrative Appeals Chamber

[2024] UKUT 131 (AAC)

Fecha: 18-Abr-2024

Ground 2: the ‘income’ issue

Ground 2: the ‘income’ issue

The legislative framework for Ground 2

40.

Part 10 of the ESA Regulations 2008 provides for the treatment of income and capital in a series of Chapters. So far as income is concerned, the relevant parts appear to be Chapter 2 (‘Income’, in regulations 90-94), Chapter 4 (‘Self-employed Earners’, in regulations 97-99) and Chapter 6 (‘Other Income’, in regulations 104-109).

41.

Regulation 90 deals with the calculation of income and materially provides as follows:

Calculation of income

90.

—(1) For the purposes of paragraph 6(1) of Schedule 1 to the Act (conditions of entitlement to an income-related allowance), the income of a claimant is to be calculated on a weekly basis—

(a)

by determining in accordance with this Part, other than Chapter 7, the weekly amount of the claimant's income; and

(b)

by adding to that amount the weekly income calculated under regulation 118 (calculation of tariff income from capital).

…

(3)

For the purposes of paragraph 10 of Schedule 2 to the Act (effect of work), the income which consists of earnings of a claimant is to be calculated on a weekly basis by determining the weekly amount of those earnings in accordance with regulations 91(2), 92 to 99 and 108(3) and (4) and Schedule 7.

42.

The general principles governing the attribution of income to particular periods of time is governed by regulation 91, which provides in part:

Calculation of earnings derived from employed earner's employment and income other than earnings

91.

—(1) Earnings derived from employment as an employed earner and income which does not consist of earnings are to be taken into account over a period determined in accordance with the following provisions of this regulation and at a weekly amount determined in accordance with regulation 94 (calculation of weekly amount of income).

43.

The particular position of self-employed earners is dealt with by regulation 92. Subject to an exception which does not apply on the facts of this case (and which relates to payments of royalties), regulation 92(1) provides for an annual assessment to be the default position:

… where a claimant's income consists of earnings from employment as a self-employed earner the weekly amount of the claimant's earnings is to be determined by reference to the claimant's average weekly earnings from that employment—

(a)

over a period of one year; or

(b)

where the claimant has recently become engaged in that employment or there has been a change which is likely to affect the normal pattern of business, over such other period as may, in any particular case, enable the weekly amount of the claimant's earnings to be determined more accurately.

44.

The earnings of self-employed earners are then defined (again, subject to various exceptions which do not apply here) by regulation 97(1) as follows:

…“earnings”, in the case of employment as a self-employed earner, means the gross receipts of the employment and include any allowance paid under section 2 of the Employment and Training Act 1973 or section 2 of the Enterprise and New Towns (Scotland) Act 1990 to the claimant for the purpose of assisting the claimant in carrying on the claimant's business.

45.

Regulation 98 deals with the calculation of net profit for self-employed earners while regulation 99 concerns the deduction of tax and national insurance contributions for self-employed earners.

46.

Finally, for present purposes, regulation 104 deals with the calculation of income other than earnings and provides in relevant part as follows:

104.

—(1) For the purposes of regulation 91 (calculation of earnings derived from employed earner's employment and income other than earnings) ... the income of a claimant which does not consist of earnings to be taken into account will, subject to paragraphs (2) to (7), be the claimant's gross income and any capital treated as income under regulation 105 (capital treated as income).

(2)

There is to be disregarded from the calculation of a claimant's gross income under paragraph (1), any sum, where applicable, specified in Schedule 8.

47.

There is no disregard in Schedule 8 for monies received as a result of criminal activity.