4.6.7.90 Notional Ordinary Income - Non-farm Property & Other Assets

Summary

This topic discusses the notional ordinary income calculation for:

  • unrealisable assets including property, and
  • unrealisable property occupied by:
    • a near relative (1.1.N.20) or long term tenant with a low income, and
    • occupied by one partner (1.1.P.85) of a separated couple.

Act reference: SSAct section 11(1)-'unrealisable asset', section 8(1)-'income'

Notional income for assets

Notional income for an asset (1.1.A.290), is the LOWER of:

  • 2.5% of its value, OR
  • its commercial lease value (1.1.C.207).

Exception: Where the unrealisable asset is a property occupied by a near relative or a long term tenant with a low income the commercial lease value is calculated as 20% of the total income of the occupant (and partner) of the property. Total income includes all social security income support payments. If the property does not have a commercial lease value, then notional income CANNOT be assessed.

Notional income for separated couples

The table below shows the notional ordinary income calculation for a person who is separated from their partner WHEN a partner is occupying an unrealisable property.

If the occupying partner… Then notional income is…
IS paying rent to the non-occupier,

the LESSER of:

  • 2.5% of the person's interest (1.1.I.185) in the property, OR
  • the amount of the rent MINUS all reasonable expenses.

If the property does not have a commercial lease value, then notional income CANNOT be assessed.

Example: Bank charges are a reasonable expense.

does NOT have a rental agreement with the non-occupier,

the LESSER of:

  • 2.5% of the person's interest in the property, OR
  • the person's share of the commercial lease value.

Example: A person who has a 50% interest in the home is taken to receive 50% of the commercial lease value.

If the property does not have a commercial lease value, then notional income CANNOT be assessed.

REFUSES to pay rent to the non-occupying partner, pending property settlement, not calculated.

A person MUST produce clear evidence that an occupying partner refuses to pay rent.

Example: A letter from a partner's solicitor.

Act reference: SSAct section 1129 Access to financial hardship rules-pensions, section 1130B Access to financial hardship rules-pension PP (single), section 1131 Access to financial hardship rules-benefits

Last reviewed: 7 November 2016