What income to include
•All benefits and tax credits. Note: a client may decide not to use any disability benefit s/he gets (eg, personal independence payment, disability living allowance and attendance allowance ) to make payments to creditors, as these benefits are intended to meet only the additional costs of disability. However, any disability benefit should be included in the list of income and in the financial statement. Usually, the disability benefit is offset by associated items of expenditure, such as mobility or care costs.
The decision whether or not to use any unallocated disability benefit to make offers to her/his creditors is ultimately the client’s, not the adviser’s.
The fact that the client is in receipt of a disability benefit should always be disclosed to creditors, as the fact that s/he is a disabled person is likely to be a relevant factor.
•Earnings – ie, net pay from full-time and part-time work.
•Self-employed earnings, net of estimated tax and national insurance contributions.
•Regular maintenance/child support payments received. Include for what and for whom they are paid.
•Investment income – eg, from savings.
•Contributions from other household members – eg, adult children living with the client.
•Occupational and other pensions.
•Any other income received by the client.
If income has recently been unusually high or low, this should be noted and the basis on which it is assessed should be clear – eg, the average of wage slips for a representative period. Only include regular sources of income, as any offer of payment must be realistic and sustainable.
The Financial Conduct Authority (FCA) requires advisers to take reasonable steps to verify the client’s income. It says that what is reasonable depends on the circumstances and the type of service the agency offers.1FCA Handbook, CONC 8.5.4R and 8.5.5G For instance, advisers working at court duty desks or providing telephone or email advice will, in practice, be unable to do this. Verifying the client’s income may also disclose that deductions are being made to pay off debts – eg, benefit or tax credit overpayments that the client has not previously disclosed, because s/he did not regard this as a ‘debt’. It is usually possible to ask the creditor to reduce the rate of deductions where it can be demonstrated that these are currently unaffordable and are leaving the client unable to meet her/his essential expenditure.
Note any future changes to the client’s income and/or circumstances, such as any benefits recently claimed but not yet awarded, or if a member of the household is about to start or end paid employment.