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Volume 2F (Financial Eligibility) of LSC Manual
Page 2F-001
Part F Financial Eligibility
1. Introduction
1.1 General
1. The following provides detailed guidance to suppliers on the assessment of financial eligibility for the following levels of service for which the supplier is responsible for the assessment of financial eligibility.
Non Contributory
(a) Legal Help;
(b) Help at Court;
(c) Legal Representation before the Asylum and Immigration Tribunal and Legal Representation before the High Court in respect of an application under section 103A of the Nationality, Immigration and Asylum Act 2002;
(d) Family Mediation;
(e) Family Help (Lower); and
Contributory
(f)Legal Representation in Specified Family Proceedings i.e. family proceedings before a Magistrates' Court other than proceedings under the Children Act 1989 or Part IV of the Family Law Act 1996.
Family Help (Higher) and Legal Representation other than the categories above are not covered in this guidance as the Commission is the assessing authority in such cases. A copy of the key guidance used by the Commission's assessment officers is provided in Volume 3 Part D of this manual and should be referred to by Authorised Solicitors who are exercising devolved powers in emergency cases for those levels of service.
2. The financial limits and method of assessment for the various levels of service are fixed in the Community Legal Service (Financial) Regulations 2000. Those regulations have been substantially amended under the Community Legal Service (Financial) (Amendment No.3) Regulations 2001. References to regulations in this guidance are references to those amended regulations unless otherwise stated. This guidance constitutes the Commission's guidance in accordance with Regulation 9 of the Community Legal Service (Financial) Regulations 2000.
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2. How are the means assessed?
2.1 General
1. The basis of means assessment is the same across all levels of service for which the supplier is the assessing authority. There are both income and capital limits for each level of service. These limits are set out in Regulation 5 and are summarised below (see paragraph 2F-003).
2. Under Regulation 3 some cases are exempt from the requirement to assess the client's means, these are:
a) Services consisting exclusively of the provision of general information about the law and legal system and availability of legal services.
b) Initial legal advice consisting of such amount of Legal Help and Help at Court authorised under contract to be provided without reference to the client's financial resources. It should be noted that of the general civil contracts, only the "Not for Profit" sector version contains such authority.
c) Legal Representation in Special Children Act and related proceedings (except appeals).
ca)Family Help (Lower) applied for by: (i) a parent of a child, or person with parental responsibility for a child (within the meaning of the Children Act 1989) or (ii) in the case of an unborn child, any person who following the birth of the child will be the mother or father of the child and will have parental responsibility for the child, prior to care proceedings (section 31 of that Act).
d)Legal Help in potential proceedings or Legal Representation in proceedings or potential proceedings before a Mental Health Review Tribunal under the Mental Health Act 1983[4], where the client's case or application to the tribunal is, or is to be, the subject of the proceedings.
e) Legal Representation for applications pursuant to sections 3(2) or 14(2) of the Child Abduction and Custody Act 1985 and for the registration of or the refusal to register a foreign maintenance order or the registration of a judgement.
f) Such services as are funded through grants under section 6(3)(c) of the Act unless the conditions of grant state otherwise.
g) Legal Help or Legal Representation for a person who is the subject of a control order, consisting of advice in connection with that order, help with an application to the Secretary of State under section 7(1) of the Prevention of Terrorism Act 2005, or representation in control order proceedings.
3. The provider of the service has, as a first step, to determine the client's financial eligibility on information provided by the client. This should be done on the requisite form provided by the Commission.
4. The forms must be completed in full and sufficient information held on file to allow the assessment to be checked if necessary. See also General Civil Contract Rule 2.5.
5. Reasonable steps, for instance requesting sight of a pay slip, must be taken to verify the information provided by the client. It is good practice to emphasise to clients the importance of giving a full and fair picture when they are applying for funding. See General Civil Contract Rule 2.5 for the detailed requirements as to evidence.
2F-003
3. Does the client qualify financially?
3.1 General
1. For all levels of service the client's gross income must be £2530 per month or less. For clients with more than 4 dependant children a higher gross income limit applies (see below). If the client's gross income exceeds this level then they are ineligible for assistance and the application should be refused. This makes eligibility far more transparent than under previous regulations. A client who is directly or indirectly in receipt of Income Support, Income Based Jobseeker's Allowance, Income Based Employment and Support Allowance or Guarantee Credit (under section 1(3)(a) of the State Pension Credit Act 2002(a)) automatically satisfies the gross income test for all levels of service. If the client is directly or indirectly in receipt of payments under Section 95 of the Immigration and Asylum Act 1999 - i.e. NASS support - they qualify automatically on income for the following levels of service for asylum and immigration matters: Legal Help and Legal Representation before a) the Asylum and Immigration Tribunal: and b) the High Court in respect of an application under section 103A of the Nationality, Immigration and Asylum Act 2002 (i.e. Controlled Legal Representation). Gross income for this purpose means the total income from all sources before the deduction of tax, National Insurance or any other allowances or disregards. This gross income cap acts as a filter and a client whose gross income is below the relevant cap must then have their disposable income and disposable capital assessed in order to determine eligibility.
2. The relevant gross income cap can be ascertained by reference to the table below.
No of dependant Children
Monthly Gross Income Cap from 7.04.08
0 - 4
£2530
5
£2741
6
£2952
7
£3163
8
£3374
9+
Add £211 per month for each additional child
For the purpose of the new gross income cap a dependant child is defined as anyone for whom the child and/or their partner (if client and partner's resources are being aggregated) receives Child Benefit.
3. Both disposable income and disposable capital must be within the eligibility limits in force at the time the application form is signed. Disposable income and capital refer to the income and capital after prescribed allowances and disregards have been applied. If either disposable income or disposable capital are above the limits, the client will not be eligible for funding and the application must be refused.
4. A client who is directly or indirectly in receipt of Income Support, Income Based Jobseeker's Allowance, Income Based Employment and Support Allowance or Guarantee Credit automatically satisfies the disposable income and disposable capital test for all levels of service. A client who is directly or indirectly in receipt of payments under Section 95 of the Immigration and Asylum Act 1999 - i.e. NASS support - will automatically be financially eligible for the following levels of service for asylum and immigration matters: Legal Help and Controlled Legal Representation.
5. The relevant limits for disposable income and capital are set out below for each level of service.
Level of Service
Income Limit
Capital Limit
All levels of service*:
Gross income not to exceed £2530 per month**
Disposable capital not to exceed:
£3000 (CLR immigration matters)
£8000 (all other levels of service)
Legal Help;
Help at Court;
Family Mediation;
Family Help (Lower);
Legal Representation before the Asylum and Immigration Tribunal; and before the High Court in respect of an application under s.103A of the Nationality, Immigration and Asylum Act 2002;
LegalRepresentation in Specified Family Proceedings i.e. Family proceedings before a magistrates' court other than proceedings under the Children Act 1989 or part IV of the Family Law Act 1996.
Disposable income not to exceed £698 per month
Passported if in receipt of Income Support, Income based Job Seekers' Allowance, Income based Employment and Support Allowance or Guarantee Credit.
[Also passported for Legal Help, Help at Court and Legal Representation (asylum and immigration matters only), if in receipt of NASS support].
Passported if in receipt of Income Support, Income Based Job Seekers' Allowance, Income Based Employment and Support Allowance or Guarantee Credit
[Also passported for Legal Help, Help at Court and Legal Representation (asylum and immigration matters only), if in receipt of NASS support].
* May be subject to contribution from income and/or capital (see section 3 paragraphs 9 to 12 below)
** Additional gross income cap for those with more than 4 dependant children (see separate table).
6. For Legal Representation in Specified Family Proceedings the upper capital limit may be exceeded if the costs incurred under the certificate are likely to exceed £5,000. Such cases must be referred to the Commission for authorisation prior to the granting of funding.
7. For Legal Help, Help at Court, Controlled Legal Representation, Family Mediation, and Family Help (Lower) provided both disposable income and disposable capital are within the limits no contribution can be called for.
8. For Representation in Specified Family Proceedings a client may have to pay a contribution from income or capital or both as set out below.
3.2 Calculating contributions for Legal Representation in Specified Family Proceedings
1. The only level of service assessed by the supplier for which contributions can be sought is Legal Representation in Specified Family Proceedings. However provided that the client's gross income is below the prescribed limit (set out in section 3 paragraph 1 above) then clients with a disposable income of £300 or below per month will not need to pay any contributions from income but may still have to pay a contribution from capital.
2. A client with disposable income in excess of £300 and up to £698 per month will be liable to pay a monthly contribution of a proportion of the excess over £296. Such contributions will be assessed in accordance with the following bands depending on the level of the assessed income.
Band
Monthly disposable income
Monthly contribution
A
£301 to £443
Quarter of income in excess of £296
B
£444 to £587
£36.75 + third of income in excess of £443
C
£588 to £698
£84.75 + half of income in excess of £587
So if disposable income is £336 per month, the contribution will be in band A, the excess income is £40 and therefore the monthly contribution will be £10 per month .
If the disposable income was £458 per month , the contribution would be in band B, the excess income would be £15 (£458 - £443), and the monthly contribution would therefore be £41.75 i.e. £36.75 + £5.
If the disposable income was £607 per month, the contribution would be in band C, the excess income would be £20 (£607 - £587), and the monthly contribution would therefore be £94.75 i.e. £84.75 + £10.
3. A client whose disposable capital exceeds £3,000 is required to pay a contribution of either the capital exceeding that sum or the likely maximum costs of the funded service whichever is the lesser.
4. Contributions should be calculated by the supplier at the beginning of the case . Such contributions are due from the date that funding is approved until either the proceedings are concluded or funding is withdrawn. The supplier and client may agree on the most convenient method for making contribution payments. The supplier should bill the Commission for the net cost of the work undertaken in accordance with General Civil Contract Specification Rule 6.2. This will be the amount of the costs less the amount of contribution due from the client (whether or not paid) and the amount of the statutory charge (if any).
5. There are new powers from April 2007 to re-assess the contribution due to a change in the client's financial circumstances. Detailed guidance on when a further assessment is appropriate is set out in section 11 below. An assessment can be amended where an error in the original assessment occurred or new information comes to light which is relevant to the assessment (see sections 10 below). For those levels of service where the Commission is the assessing authority (i.e. Family Help (Higher) and other Legal Representation), there remains the power to reassess eligibility and contributions where a client's circumstances change (see also Volume 3 Part D).
2F-004
4. General Principles of Assessment
4.1 Period of Calculation
1. The period of calculation when determining income is the calendar month up to and including the date of the application for funding. For example, if the application is made on 8 December then the period of calculation will commence on 9 November. In practical terms when income/allowances do not vary month on month then the relative amounts can be taken by reference to the most recent month's or week's payments. e.g. the most recent monthly wage.
4.2 Aggregation of Means
1. Regulation 11 contains a general provision that the income and capital of the client's partner must be taken into account and added to those of the client. Partner is defined as anyone (including a person of the same sex) with whom the applicant lives with as a couple, and includes a person with whom the person concerned is not living but from whom he is not living separate and apart.
2. This means that just because the client and their partner are physically separated i.e. they live in separate properties, does not necessarily mean that they are living separate and apart for the purpose of the regulations. The fact that both terms are used (i.e. "separate" and "apart") means that more than mere physical separation is required if the partners' means are not to be aggregated. Living separate and apart is well defined in the context of matrimonial law and refers to a breakdown in the relationship. In other words, the parties must be living separate and apart because at least one of them regards the relationship as at an end and not due purely to financial or practical reasons e.g. job location or the fact that one of the parties is in prison, hospital, residential care etc. (see also guidance volume 2 Part A section 14 para MH2.5 in the case of Mental Health category cases). In many asylum cases there may be occasions where the client is physically separated from their partner due to the partner still being abroad, but the relationship is still intact. In such cases the normal rules of aggregation still apply and the client and their partner will still be treated as a couple for aggregation purposes. However in such cases it may be necessary to consider whether the assets and income of the partner, together with any of the client's assets that have been left behind, are currently truly 'disposable' as far as the client is currently concerned. In such cases the supplier should make reasonable enquiries of the client to determine to what extent that income and those assets are available. If it is decided in an individual case that the partner's income and assets are not available to the client and therefore excluded from the assessment then it would not be appropriate to make any dependant's allowance for the partner (see section 6 below).
3. Further in general the term separate and apart refers to physical separation i.e. the parties are living in separate properties. However, this may not always be the case. It is possible for former partners to live separate and apart in the same household. This would be the case if they regarded their relationship as at an end but remained living in the same property simply waiting for the property to be sold before going their separate ways.
4. In addition for unmarried couples, although not conclusive it would be usual for there to be some evidence of a pooling of financial resources and they must regard themselves as a couple. It would not be appropriate to aggregate the resources of say a brother and sister, or flatmates who are not living as a couple. Further evidence of living as a couple may include joint care of a child of the couple. Issues may arise where a couple are married according to English law but have not undergone their traditional cultural ceremony and thus are not and never have been actually living together. In the eyes of each other and their family and community they are not yet married. In such cases it would be appropriate to treat them as though they were not married and therefore not to aggregate the resources in the assessment.
5. However, there is an important exception to this rule and means are not aggregated where the partner has a contrary interest in the matter in respect of which the client is seeking funding.
Contrary interest in the most obvious sense will mean that the partner is the opponent or potential opponent in proceedings. However, this will not necessarily be the case - the client and their partner could in theory have a contrary interest in a claim made by a third party, such as in the case of a mortgagee seeking possession where undue influence by the partner may be a defence.
In disputes between divorcing or separating couples, whether as to children or property, one partner will by definition have a contrary interest to the other. However, if a client has left his or her spouse and has gone to live with a new partner as a couple in the same household, then the means of the new partner should be aggregated with those of the applicant.
2F-005
5. Assessing Gross Income
5.1 General
1. If the client is directly or indirectly in receipt of Income Support, Income Based Jobseeker's Allowance, Income Based Employment and Support Allowance or Guarantee Credit, they qualify automatically on income (by virtue of Regulation 4(2)) for all levels of service. If the client is directly or indirectly in receipt of payments under Section 95 of the Immigration and Asylum Act 1999 - i.e. NASS support - they qualify automatically on income for the following levels of service for asylum and immigration matters: Legal Help and Controlled Legal Representation. The client is therefore passported if their partner is in receipt of one of those benefits and the client is included in the partner's benefit claim. From 5 December 2005, a same sex couple that is claiming state benefits will be paid as a couple and no longer as two single people, this applies whether or not the couple have a registered civil partnership in accordance with the Civil Partnership Act 2004. Passporting arrangements will therefore apply to married and cohabiting couples (including couples of the same sex) and civil partners. Where the partner is in receipt of a passported benefit as a single person then the client is not passported for funding purposes. In such cases the client's means should be assessed and the partner's income support included in the assessment as a source of income for the couple. Working Tax Credit and Child Tax Credits are not passporting benefits. In such cases the client's means should be assessed and the net amount of tax credit received each week included in the assessment as a source of income.
2. Clients in receipt of the above passporting benefits will also satisfy the disposable income and capital limits for the levels of service specified above.
3. "Income" means the total income from all sources which a person has received or may reasonable expect to receive in respect of the calendar month up to and including the date of the application for funding. In determining gross income all income must be included whether from employment, state benefits or elsewhere, e.g. assistance from friends or relatives.
Any payments made direct to third parties on behalf of the client will count as the client's gross income by virtue of Regulation 11(4)(b) of the Community Legal Service (Financial) Regulations 2000. This could be for example payments made by an ex-partner as maintenance direct to a third party on behalf of the client e.g. ex-partner pays the mortgage on the former matrimonial home direct to the lender. When determining disposable income the relevant mortgage payment should be allowed against income as a housing cost in accordance with the rules for that particular allowance.
4. To calculate calendar monthly income, multiply by 52 and divide by 12 if payment is weekly and multiply by 13 and divide by 12 if payment is four weekly.
5.2 Erratic Income (including the self employed)
1. Where a client's income is erratic (because of bonuses, commission, nature of employment or payment etc.) they may be ineligible for funding one month, but eligible the next as it is the income a client has received or can reasonably expect to receive in respect of the calendar month prior to the application that is taken into account. Where a client has received an annual bonus in the period of calculation then this should be treated as capital.
2. As long as there is no question of the client having deprived themselves of income (see section 8 below) with a view to qualifying, then there would be nothing to stop them from delaying their application for funding until the next month. In these situations, the client should be made aware of the basis of the assessment and the effect of good/bad months. It will be for the client to decide if they wish to proceed immediately on a private fee paying basis if on the previous month's income they are ineligible.
3. It is important to remember that this situation differs from deprivation of income or capital (see section 8 below). This is not allowed and the resources which have been disposed of must still be taken into account in the assessment.
4. The income that should be taken into account should include any that is due or will become due for the period of calculation. If a client has become entitled to money in the previous month which he has not yet received (e.g. he has earned a commission), then that income too must be included in the assessment.
5. In relation to parental contributions to students or student loans these should be treated as income by taking the annual student loan or contribution obtained by the student and dividing by 12.
6. In the case of a self employed client, it is the level of drawings taken from the business for personal use which will count as the client's income. There are no special deductions for the self-employed. If no drawings have been taken in the last month, or the most recent month's drawings appear low then consideration should be given as to whether the client has done so with a view to deliberately reducing their income for the purpose of qualifying for funding. In such cases the normal monthly drawings should be established and included in the assessment. If the client states that they have not taken any drawings from the business for their personal use e.g. because it is a new business then enquiries should be made of the client to determine how they have met their day to day living costs during the relevant period. Any income or assistance that has been made available to the client from other sources e.g. assistance from friends or relatives with bills, should be treated as income and included in the assessment.
5.3 "No income" cases
1. Situations may arise, especially in the family/matrimonial context, where a client has not received or become entitled to any direct income at all in the preceding month. This may be so where the client is living separate and apart from their spouse in the same home, with the client not being employed but the spouse still meeting all outgoings. In some cases particularly where the change occurred during the past month it might not be appropriate to base the assessment on the income received for the whole of the previous month. In such cases an estimate should be made of what the client is likely to receive in the next calendar month based on the income received since the change took place. In these circumstances the client can be assessed as having no income. If, however, the client is receiving money from the partner, or a friend to pay bills or as maintenance, this must be shown as income.
5.4 Disregarded income
1. Certain state benefits are disregarded when determining gross income. The disregarded benefits are:
(a) The following payments under the Social Security Contributions and Benefits Act 1992 namely:
Disability living allowance;
Attendance allowance paid under Section 64 or Schedule 8 paragraphs 4 or 7(2);
Constant attendance allowance paid under Section 104 as an increase to disability pension;
Any payment made out of the social fund;
Carer's Allowance;
Council Tax benefit; and
Housing Benefit;
(b) Any direct payments made under the Community Care, Service for Carers and Children's Services (Direct Payments) (England) Regulations 2003(a) or the Community Care, Service for Carers and Children's Services (Direct Payments) (Wales) Regulations 2004(b);
(c) So much of any back to work bonus received under Section 26 of the Jobseekers Act 1995 as is by virtue of that section to be treated as payable by way of jobseeker's allowance;
(d) Severe Disablement Allowance paid under the Social Security (Severe Disablement Allowance) Regulations 1984;
(e) Exceptionally Severe Disablement Allowance paid under the Personal Injuries (Civilians) (Amendment) Scheme 1983;
(f) War and War widows pensions paid under the Naval, Military, Air Forces etc (Disability & Death) Service Pensions Order 2006(c);
(g) To the extent that it exceeds the relevant dependants allowance made under regulation 20(2)(b), any financial support paid under any agreement for the care of a foster child; and
(h) (h) Any payment made out of the Independent Living Fund (2006).
6. Assessing disposable income - allowances against income
(figures are monthly unless otherwise stated)6.1 Dependants' allowances
1. In determining the disposable income the following deductions can be made in respect of the client's dependants:
£149.69 is allowed against income if the applicant has a partner. Note this allowance applies provided the couple are living together, regardless of whether there is a contrary interest but a couple should not be treated as living together if they have been treated as living separate and apart for aggregation purposes.
£228.52 is allowed for each dependent child (including a foster child) or dependent relative of the applicant who is living in the same household and is aged 15 or under.
£228.52 is allowed for each such dependant aged 16 or over.
2. It is the age of the child at the beginning of the period of calculation which determines which rate is appropriate i.e. the age at the start of the calendar month in question.
6.2 Tax and National Insurance
1. The following sums should be deducted from total income when calculating the disposable income for the calendar month:
(a) Any income tax paid on that income. For the self employed, a notional income tax figure should be based on 1/12th of the client's income tax liability for the preceding year (i.e. of their last income tax bill). If the client either does not have the information (e.g. because they have not submitted any returns), or because no such payments have been assessed yet e.g. new business, then no allowance should be made.
(b) Any National Insurance contributions paid or payable on that income under Part I of the Social Security (Contributions) Act 1992. For the self employed, a deduction of £9.97 per month can be made for National Insurance contributions (the class 2 payment).
6.3 Maintenance paid by the client
1. In calculating disposable income an allowance can be made for Bona fide maintenance payments to a spouse or former spouse, a child or relative, who is not in any such case a member of the household of the client. An allowance can be made whether the payments are being made under a court order, CSA ruling or voluntary agreement. Only payments actually made can be taken into account. This allowance should be the expenditure incurred during the month of calculation. In theory there are no set limits to the amount that can be allowed under this heading but evidence of payments should be sought where the amount claimed appears unreasonable. Maintenance payments could include simply paying an ex-partner's household bills or mortgage.
6.4 Housing Costs
1. In calculating disposable income an allowance can be made in respect of mortgage or rent payable for the period of calculation in respect of the client's main dwelling. The amount allowed should be net of housing benefit i.e. what the client actually pays from the assessed income (housing benefit being one of the disregarded benefits for the purposes of calculating disposable income). For client's with no dependants i.e. where no dependants allowances have been made (see section 6 paragraph 2 above) the maximum monthly allowance in this respect will be £545 . No excess over the amount can be allowed. Where any dependants allowance(s) have been made then the rent or mortgage repayments can be allowed in full.
The amount to be allowed in the assessment is the monthly rent or mortgage payable. In practical terms it will not be easy to identify separately arrears of mortgage payments, as the client will generally declare these as a single revised monthly mortgage payment. If the client has already come to an arrangement to pay off arrears by increasing their monthly rent or mortgage payment, then, provided those increased payments are actually being paid by the client, that increased rent or mortgage payment can be treated as the monthly rent or mortgage payable in the assessment. This is different from a situation whereby a client has commenced paying off arrears in order to reduce their disposable income with a view to qualifying for funding. Such a situation would be regarded as intentional deprivation of income and only the normal monthly rent or mortgage payments should be allowed in the assessment in such circumstances.
Mortgage repayments include the monthly premiums of any linked life insurance/endowment policies, PEPs, or other instruments which will be used to repay the capital sum borrowed.
Council Tax, water rates, insurance premiums and other associated housing costs are not allowable deductions in the assessment. If there is a clearly identifiable amount relating to water rates included in the rent payable by the client then these should not be included as rent. However it is not necessary for suppliers to routinely seek clarification as to whether or not the rent declared by the client includes a sum for water rates.
2. Where a client indicates they are paying board and lodging then only the amount in respect of accommodation can be allowed. In those cases where informal arrangements exist, for example lodging with a close family member, and the amount in respect of accommodation cannot be specified by the client then it should be assumed that half of the declared board and lodging element is for accommodation, the remainder is assumed to be for food and other incidentals not covered by the regulations.
3. Where the client states expenditure on housing costs which is more than one third of their gross income then documentary evidence (e.g. copy of bank statement, mortgage statement, or rent book) to support the figures stated should be obtained.
6.5 Employment related expenses
1. Where the client or partner is assessed as receiving a wage or salary from employment i.e. not the self employed, a deduction of £45 for work related expenses shall be made in respect of each person so assessed. This is a set figure, and it is therefore unnecessary to obtain details of actual expenses, but see also childminding below.
2. Where a client or their partner is assessed as receiving a wage or salary from employment or an income from a trade, business or other gainful occupation (i.e. self-employed), a deduction can be made in respect of actual monthly expenditure on childminding charges incurred as a result of that person's absence from home by reason of his employment/self employment. Unless there are exceptional circumstances e.g. disability of the child, it would only be reasonable to make such a deduction in respect of a dependant child aged 15 or under. It would also be unreasonable to make such an allowance where one or other of a couple was available to look after that child. Where the client states expenditure on child care which is more than £600 per month for someone working full time i.e. 35 hours per week (or part-time equivalent) then documentary evidence (e.g. copy of bank statement, copy of agreement/contract with childminder) to support the figures stated should be obtained.
3. Where it is accepted in accordance with the criteria above that the client's (and where applicable, partner's) circumstances are such that a deduction for child care costs is appropriate, the deduction shall be made once per assessment (i.e. to avoid double-counting).
7. Assessing Disposable Capital
7.1 General
1. In the case of Legal Help, Help at Court, Controlled Legal Representation, Family Mediation, Family Help (Lower) and Legal Representation in Specified Family Proceedings, those in receipt of Income Support, Income Based Jobseeker's Allowance, Income Based Employment and Support Allowance or Guarantee Credit qualify automatically on capital. These benefits are act as a 'passport' to financial eligibility for all levels of service. In addition, if the client is directly or indirectly in receipt of payments under Section 95 of the Immigration and Asylum Act 1999 - i.e. NASS support - they qualify automatically on capital for the following levels of service for asylum and immigration matters: Legal Help and Controlled Legal Representation.
2. "Capital" means the amount or value of every resource of a capital nature, including all savings and any other capital assets (other than the exceptions listed below). Capital derived from a bank loan or borrowing facilities should be taken into account. There are special rules about assessing the value of the client's dwelling which are set out below.
3. The only items of capital which are not taken into account are the following:
(a) Household furniture and effects (unless of exceptional value);
(b) Clothes;
(c) Tools and implements of trade;
(d) So much of any back to work bonus received under Section 26 of the Jobseekers Act 1995 as is by virtue of that section to be treated as payable by way of jobseeker's allowance;
(e) Any direct payments made under the Community Care, Service for Carers and Children's Services (Direct Payments) (England) Regulations 2003(a) or the Community Care, Service for Carers and Children's Services (Direct Payments) (Wales) Regulations 2004(b);
(f) capital value of the client's business in the case of the self employed;
(g) capital held in trust funds to which the client cannot access;
(h) cars or other vehicles in regular use (unless of exceptional value);
(i) Any payment made out of the Independent Living Fund(2006).7.2 The client's share of joint assets when the partner is the opponent or contrary interest exists
1. There will often be assets which are jointly owned by the parties or to which both parties have access. Where assets are held in joint names the assessing authority in its discretion, will normally assume that the asset is owned in equal shares (unless documented evidence of the asset being owned in unequal shares - e.g, 70.30 division etc - exists). However, in deciding what should be taken into account for the client a key question is whether the client has access to or control of the asset. For example, if the client has free access to money in a bank account, then that money should be included in the client's assets. There is, however, some scope for discretion as to the valuation of the client's interest in the asset. If the client establishes that there is an agreement or understanding about certain assets such as a joint account being split equally, then it would be reasonable only to take into account half the value of the asset.
7.3 Subject matter of the dispute
1. Under the regulations the value of the subject matter of any claim in respect of which a person is seeking funding is required to be left out of account in computing the capital of that person. This applies to Legal Help, Help at Court, Controlled Legal Representation, Family Mediation and Family Help (Lower). In respect of an application for Legal Representation in Specified Family Proceedings, the amount disregarded under the subject matter of dispute rule shall not exceed £100,000; where the client's interests in such assets exceeds £100,000 the excess will be included within the assessment. In calculating the value of the client's interests in any resource of a capital nature which is owned jointly or in common with any other person, the assessing authority in its discretion will normally assume that the asset is owned in equal shares.
2. This situation only applies to capital assets. It is a very important rule in the context of family/matrimonial cases. It means that assets which are being fought over in relation to the dispute for which funding is required, where the client's interest in those assets does not exceed £100,000, must not be taken to account* when assessing capital.
(*Exemption limited to £100,000 in respect of an application for Legal Representation in Specified Family Proceedings).
3. In dealing with property assets which are in dispute in respect of an application for Legal Representation in Specified Family Proceedings the following hierarchy of disregards will apply.
Where a client's main or only dwelling in which he resides is the subject matter of dispute-
Step 1) Apply the mortgage disregard (actual mortgage or £100,000 whichever is the less) to the value of the property to establish the total amount of equity within the property; Multiply this figure by the client's percentage share of the property.
Step 2) Apply the subject matter of dispute disregard of £100,000 to the client's share of any equity within the property.
Step 3) Apply the Equity disregard of £100,000 to the remainder (if any) of the client's share of the equity within the main dwelling.Therefore, the mortgage disregard will be applied before the subject matter of dispute disregard. The equity disregard is applied after the subject matter of dispute disregard to any remaining property equity.
Example 1:
The applicant has a home worth £320,000 and the mortgage is £150,000.Value of Home
£320,000
Deduct mortgage up to maximum allowable:
minus
£100,000
Equity
£220,000
Client's share of Equity (assume asset held in equal shares):
£110,000
Apply Subject Matter of Dispute disregard
minus
£100,000
Remaining Equity
£10,000
Apply Equity exemption for main dwelling property
minus
£100,000
Capital assessed
£nil
The client is therefore eligible for funding in this example.
Example 2:
The applicant has a home worth £520,000 and the mortgage is £150,000.Value of Home
£520,000
Deduct mortgage up to maximum allowable:
minus
£100,000
Equity
£420,000
Client's share of Equity (assume asset held in equal shares):
£210,000
Apply Subject Matter of Dispute disregard
minus
£100,000
Remaining Equity
£110,000
Apply Equity exemption for main dwelling property
minus
£100,000
Capital assessed
£10,000
The client is therefore ineligible for funding in this example.
Example 3:
The applicant has a home worth £500,000 and the mortgage is £150,000. The client also has full access to a joint savings account, account balance £9,000Value of Home
£500,000
Deduct mortgage up to maximum allowable:
minus
£100,000
Equity
£400,000
Client's share of Equity (assume asset held in equal shares):
£200,000
Client's savings
£9,000
Apply Subject Matter of Dispute disregard
minus
£100,000
Remaining Equity and Savings
£109,000
Apply Equity exemption to property equity only
minus
£100,000
Capital assessed
£9,000
The client is therefore ineligible for funding in this example.
Where the client's interest in the main dwelling property and in other capital assets is the subject matter of dispute, the subject matter of dispute exemption (i.e. £100,000 disregard) should be applied to the main dwelling property first; the remainder (if any) should then be applied to the other assets which are in dispute. The total amount disregarded as subject matter of dispute is not to exceed £100,000.
Where the property in dispute is not the client's main dwelling:
Carry out Steps 1 (mortgage disregard) and 2 (equity disregard) above, but do not apply the main dwelling equity disregard (i.e. Step 3) to the client's share of property equity.4. Sometimes it will be obvious that a particular asset is in dispute between the parties, but in the family/matrimonial context the point is more difficult to determine if parties seek funding at an early stage and there are a range of assets which may or may not be at issue. The general approach should be that an asset should not be treated as the subject matter of the dispute if the other party has made no specific claim against it and if in practice it is available to the applicant to use as his or her own and could be used to fund legal costs.
5. If the funding is for services on issues about a child/children, then assets cannot be treated as subject matter of the dispute, even if the parties are litigating or otherwise in dispute over those assets (although the assets may be disregarded under any other appropriate heading).
7.4 Value of property
1. Provided it is not subject matter of the dispute, a client's main or only dwelling in which he resides must be taken into account as capital subject to the following rules:
(a) The dwelling should be valued at the amount for which it could be sold on the open market;
(b) The amount of any mortgage or charge registered on the property must be deducted but the maximum amount that can be deducted for such a mortgage or charge is £100,000.; and
(c) The first £100,000 of the value of the client's interest after making the above mortgage deduction must be disregarded.
Example:
The applicant has a home worth £215,000 and the mortgage is £200,000:
Value of home: £215,000
Deduct mortgage up to maximum allowable: £100,000
Deduct exemption allowance: £100,000
Amount to be taken into account in assessing financial eligibility: £15,000
In this example the client is ineligible.2. Where the applicant has more than one property the value of all other properties should be taken into account but the total amount which can be allowed in respect of mortgages and charges on all the properties cannot exceed £100,000. In applying this rule the mortgage for the main dwelling is deducted last. There is no equity disregard for second properties.
Example:
The client has a main dwelling worth £150,000 and a second dwelling worth £100,000. Each has a mortgage of £80,000.
The second property after allowing for the mortgage has a net equity of £20,000. The value of the main dwelling must be taken into account but only £20,000 can be deducted for the mortgage. This is because £80,000 of mortgage has already been taken into account on the second property leaving only £20,000 (of the £100,000 allowable maximum) to be allowed against the main dwelling. The equity in the main dwelling would therefore be treated as £130,000. The first £100,000 of equity in the main dwelling is disregarded giving equity in that property of £30,000. The total capital would therefore be £50,000. The client would not be eligible for funding.
7.5 Pensioner's disregard (Regulation 35)
1. These are additional capital disregards on assessments where either the client (or spouse/partner with whom his resources are to be aggregated) is aged 60 years or over at the date of computation and their disposable income is less than £300 per month
2. The following process is followed:
(a) calculate the client's (and spouse's / partner's) disposable income;
(b) if the disposable income figure is above £300 per month, the amount of disposable capital is assessed in accordance with the normal regulations;
(c) if however, the disposable income is £300 per month or less, then the capital held, up to the maximum available for the particular income, is disregarded in accordance with the following table:
Monthly disposable Income (£)
Amount of capital disregard
0 - 25
£100,000
26 - 50
£90,000
51 - 75
£80,000
76 - 100
£70,000
101 - 125
£60,000
126 - 150
£50,000
151 - 175
£40,000
176 - 200
£30,000
201 - 225
£20,000
226 - 300
£10,000
Over 300
nil
Example:
The client is aged 66. Total disposable income excluding interest from capital is £90.
Total disposable capital (after other allowances and disregards) is £73,000.
Deduct the pensioners disregard in accordance with Appendix 2 of £70,000.
Disposable capital is therefore £3,000
The client will therefore be eligible for funding.3. Please note if both the client and spouse/partner are aged 60 years or over, where an aggregated assessment is to be carried out, only one amount of disregard will apply in respect of that assessment (as set out in the above table) e.g. if aggregated disposable income is £160 per month, one amount of £40,000 should be disregarded.
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8. Intentional deprivation of resources
8.1 General
1. Occasionally a person will deliberately transfer or dispose of assets to another person in order to make themselves eligible. This is not permitted. If it appears that a person applying for funding has directly or indirectly deprived himself or herself of any resources or has converted any part of his resources into resources which are to be left out of account wholly or partly under the regulations, the resources which have been transferred or converted must still be taken into account in the assessment. This will normally mean that such a person will not qualify for funding.
2. Note that this rule applies where it appears to the provider that the person concerned has transferred or deprived himself of assets with the intention of reducing the amount of his gross income, disposable income, or disposable capital, whether for the purpose of becoming eligible or otherwise. Obviously this rule would not apply if the person had lost assets or money without intending to do so.
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9. Eligibility of children
9.1 General
1. A child may apply for funding in the circumstances set out in the Funding Code (see also General Civil Contract Specification rule 2.3). When assessing the means of a child, the resources of a parent, guardian or other person who is responsible for maintaining him or who usually contributes substantially to the child's maintenance must be taken into account, as well as any assets of the child. There is a discretion not to aggregate assets in this way if it appears inequitable to do so, having regard to all the circumstances including the age and resources of the child and any conflict of interest between the child and the adult(s)
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10. Mistakes in assessment
10.1 General
1. Sometimes a mistake will be made in assessing a person's financial eligibility or new information will come to light which suggests that an earlier assessment was inaccurate. Where this happens the assessment can and should be re-opened and a new assessment carried out which may mean that a person was never eligible for funding. If any dishonesty or improper conduct in relation to disclosure of assets is discovered, the details should be reported to the regional office. In such cases the costs incurred prior to such a discovery will be assessed in accordance with the Commission's externally published costs assessment guidance.
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11. Changes in circumstances
11.1 General
1. Where on an accurate assessment a client is found financially eligible for funding by the supplier, there is now a new power to carry out a further assessment of means on an existing application if the client's circumstances change. The client is under a duty to report any change of his financial circumstances of which he is or should reasonably be aware has occurred since the original assessment and which may affect the terms on which the client was assessed as eligible to receive funded services. Such improvements in means, which may include new employment or a lottery win etc., should be notified to the supplier in relation to any existing application or fresh application for funding.
2. However the assessing authority may decide not to make a further assessment in relation to an existing application, if it considers such a further assessment inappropriate, having regard in particular to the period during which funded services are likely to continue to be provided to the client. For services where the supplier is the assessing authority a further assessment is unlikely to be appropriate unless the client's means have improved dramatically (e.g. the client receives a substantial inheritance or lottery win) or the matter is likely to run for some time, say three months or more, after a significant change in circumstances. (A significant change is an increase in capital in excess of £750 or an increase in income in excess of £60 per month that takes the client’s income or capital above the relevant eligibility limit). However, it will be appropriate to carry out a new assessment reflecting the client's changed circumstances in respect of any fresh application for funding.
3. For example, the client reports that he has received a capital sum of £10,000. This is considered a dramatic improvement in means, and a further assessment should be undertaken immediately. Unless the client is a pensioner on a low income, in which case an additional disregard may apply (see section 7.5 above), it will only be necessary to reassess capital and determine that the client is no longer eligible on the basis of the £10,000 receipt. Any capital receipt of £8,000 or more should be considered a dramatic improvement in means.
4. An example of a dramatic improvement of income would be where a client who was previously on a passporting benefit or otherwise on a low income reports that they have started a new job that provides a salary in excess of the gross income limit, e.g. a salary of £3,000 per month. A further assessment of income should be undertaken immediately in these circumstances, in which case the client will be no longer eligible on the basis of gross income.
5. Where the client reports a significant change of circumstances, (e.g. a client whose capital was previously assessed as £7,000 reports that they have received further capital of £1,500 or a client whose disposable income was £600 per month reports that they are receiving an additional income of £150 per month, i.e. a sum which takes the client above the eligibility limit), the supplier will only need to carry out a reassessment if the case is likely to last for three months or longer following the change; otherwise a reassessment will not be necessary. If the case is likely to continue for longer than this time limit, the reassessment should be carried out immediately and if the client is ineligible, the supplier should cease work on the case.
6. For Family Help (Higher) and Legal Representation where the Commission is the assessing authority, there continues to be provision for the Commission to reassess entitlement to Legal Representation at any point during the life of a certificate when a client's means change (see Volume 3 Part D).
7. Where a client is initially ineligible there is nothing to prevent a further application and assessment where a change in circumstances makes him eligible. However, the cover only runs from the date the application form was fully completed and the client was assessed as eligible.
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12. Evidence of Means
12.1 General
1. Rule 2.4 of the Contract Specification provides that subject to the exceptions set out within Rule 2.5, satisfactory evidence in support of the client’s information as to their means must be provided to you before you assess, and the evidence (or a copy) retained on the file.
12.2 Evidence of means
1. Satisfactory evidence as to means will need to be supplied and a copy kept on file. Examples of satisfactory evidence for income are set out at paragraph 5 below. This list is not exhaustive and other evidence may be accepted provided it is reasonably sufficient to establish the client's and (if aggregated) their partner's income during the computation period. For applications from 3 December 2001, the computation period is the calendar month ending on the day of the application and practitioners should attempt to obtain evidence relating to that period.
2. Written evidence that does not refer directly to the computation period itself may be accepted as confirmation of the client's statement of their income during that period where it seems reasonable to do so. This might be for example where the client produces a letter from the Dept. Of Work and Pensions confirming their award of benefit - this may well be dated some time before the start of the computation period. In such cases, suppliers should try to ensure that the evidence the client provides is the most up to date in the client's possession - such as the last letter confirming an up rating of benefit (see table in paragraph 5 below).
3. In the case of the self-employed, corroborative evidence may sometimes not relate directly to the period of computation. Accounts may not have been prepared for that period but earlier accounts can be used to back up the client's statement of drawings from the business for personal use, as opposed to business expenses, if no more up to date evidence is available.
4. Where the income consists of a benefit or tax credits, the evidence must show the type of benefit or tax credit in payment and where relevant the amount. Clearly the amount will be irrelevant if the benefit is income support, income based job seekers allowance, income-based employment and support allowance or guarantee credit (under section 1(3)(a) of the State Pension Credit Act 2002(a)). In lieu of written evidence suppliers may telephone the relevant agency, e.g. Dept. Of Work and Pensions or HM Revenue and Customs as appropriate, whilst the client is in attendance to confirm details of type and amount of benefit or tax credit, and current entitlement. A note of that conversation including the relevant details, along with any unique reference number and name of person spoken to, will be acceptable evidence on audit.
5. Examples of acceptable (and unacceptable) evidence for income.
SOURCE OF INCOME
SATISFACTORY EVIDENCE
Employed (P.A.Y.E.)
Most recent payslip(s).
Self Employed
Bank statements or working accounts/cash book showing drawings. Most recent tax assessment or set of accounts.
State Benefits (various) - Direct Payment of benefit to Client's bank/building society /post office card account.
1) Recent bank/building society statement - however benefit type must be specified on the statement; 2) original benefit notification letter supported by a recent bank statement where the notification letter is more than 6 months prior to the date of the application; 3) most recent letter notifying a change in benefit amount (no more than 6 months old); 4) if the client can only provide a bank statement which does not specify the benefit, the provider should refer to paragraph 12.2.4 above concerning evidence in lieu of written confirmation for audit requirements.
Income Support - IS
See Direct Payments information above.
Alternatively a letter from the Dept. Of Work and Pensions confirming the client was in receipt of IS at time of applying for Legal Help.
[Order Books are now largely obsolete - however if a current order book is held, a copy of the front of the benefit book showing the type of benefit and the date of the last payment order (or if not clear, include copy of second page / inside cover confirming benefit in payment)].Income-Based Jobseekers Allowance IBJSA
See Direct Payments information above.
Alternatively a letter from the Jobcentre Plus/Dept. Of Work and Pensions confirming the client was in receipt of IBJSA at time of applying for Legal Help.Income-Based / Related Employment and Support Allowance
See Direct Payments information above.
Alternatively a letter from the Jobcentre Plus/Dept. Of Work and Pensions confirming the client was in receipt of Income Related ESA at time of applying for Legal Help.Guarantee Credit (under section 1(3)(a) of the State Pension Credit Act 2002(a))
See Direct Payments information above.
The Award Letter together with the Award Calculation Sheet (or the clerical versions of these forms) should be accepted as satisfactory evidence of claim (if no more than 6 months old). Otherwise any relevant correspondence from the paying agency in the client's possession would be acceptable such as a Statement of Entitlement that explains how the client's Pension Credit has been worked out.Asylum Seekers in receipt of NASS support
Confirmation from NASS or Local Authority that the individual is in receipt of support or copy of a NASS voucher. Written evidence should be less than 6 months old. [NASS payments are passporting for asylum and immigration matters for legal help, help at court and controlled legal representation].
Working Tax Credit and Child Tax Credit
A copy of the most recent Tax Credit Award Notice issued to the client should be accepted as satisfactory evidence of the claim. Otherwise any relevant correspondence from the paying agency (HM Revenue and Customs) in the client's possession would be acceptable. Evidence must also be obtained of the client's other income e.g. salary.
Unacceptable evidence as to means
Copies of the ES40 (signing on card) or jobseekers agreements - these are not evidence of receipt of benefits -they merely show the client has at some time registered as available for and actively seeking work.
The debit card of a Post Office card account.
The Award Letter or the 'short version' Statement of Entitlement will not be accepted by itself as evidence that the Guarantee Credit is in payment where the form does not specify the type of Pension Credit received.
[Order books are largely obsolete, however if a book is held, the front cover only of an order book is unacceptable if it does not show the type of benefit or, where the client is not passported, the amount received].
6. Evidence of expenditure is required in specific circumstances (based on risk) that are set out in the preceding guidance. Examples of acceptable evidence is given below:
EXPENDITURE TYPE
SATISFACTORY EVIDENCE
Income Tax
For employees: most recent payslip(s).
For the self employed: copy of latest tax calculation sheet (i.e. last income tax bill).National Insurance
Employees: most recent payslip(s).
[The standard deduction of NI Class 2 of £9.97 per month can be made for the self-employed].Housing costs (i.e. where housing costs are more than one-third of client's income).
Rent book.
Tenancy Agreement.
Copy of mortgage statement.
Copy of bank statement (where it is clear what the payment relates to).Child Care costs (i.e. that are more than £600 per month)
Copy of bank statement (where it is clear what the payment relates to).
Copy of agreement / contract with childminderMaintenance (i.e. where amount declared appears to be unreasonable / cases of doubt)
Cashed cheques
Bank statements
Copy of maintenance order (where applicable).
7. For capital, the client's statement and signature on the application form will normally be sufficient evidence, but other documentary evidence of disposable capital must be obtained in cases of doubt (e.g. statements for current accounts, savings or other financial accounts; independent valuations for property or items of value, share certificates etc). In general terms, suppliers should obtain evidence of capital if they have reason to believe, whether through previous dealings with the client, the circumstances of the case, wealthy lifestyle indicators, or otherwise, that the client may have capital in excess of the limit or may have acted to deprive themselves of capital; particular care should also be taken on cases where a client declares capital just under the £3000 limit (for CLR immigration cases) or £8000 limit (all other cases).
8. Generally the client's means should be assessed together with the accompanying evidence. Clients should be asked to bring the evidence with them at their first appointment.
9.Rule 2.5 of the Contract Specification sets out the circumstances when you may assess the client’s means without the accompanying evidence.
10. Exceptionally, the personal circumstances of the client (such as age, mental disability or homelessness) may make it impracticable for any evidence to be supplied. In such cases, eligibility can be assessed without evidence. However, the attendance note must give the reason why evidence could not be obtained and suppliers must be prepared to justify this on audit if necessary.
11. Whether or not it is impracticable to obtain evidence will depend on the circumstances of the case. Those who are homeless, or who are in detention will have particular difficulty in supplying evidence. For asylum seekers, there may be a difference between those who apply for Legal Help when they have just arrived in the country and cannot be expected to provide evidence, and those who apply when they have been in the country long enough to receive benefits/vouchers or to work, who can provide evidence. It will often be impracticable to obtain evidence of income from patients with mental health problems who are in hospital (for example, those detained under the Mental Health Act). Practitioners should however attempt to obtain oral or written confirmation of the position (e.g. type of benefit received) from the ward manager or social worker where practicable. It may on occasion prove impracticable to obtain evidence of a partner's income, for example where the partner refuses to provide the information despite repeated requests. In such circumstances the supplier will rely on the best estimate that the client can give of their partner's means for the purposes of aggregation. The supplier must record the justification for lack of evidence on the file.
12. There may be exceptional cases where a client never attends the solicitor's office during the course of a matter, for example the client is disabled and cannot access the office so the case is entirely conducted via home visits and correspondence. In such cases the supplier may not be able to obtain a copy of the evidence of income for the file. It will be acceptable for the solicitor to confirm on the file that he or she has seen acceptable evidence of income and to record brief details, for example type and amount of benefit and applicable dates.
13. It is important to remember in this context that the evidence to be supplied must relate to the time of application, so that it is the client's circumstances at that time that are relevant in judging whether or not it was impracticable to obtain evidence.
14. Thus, if at the time of the application for Controlled Work the client has applied for benefit, tax credits or NASS support and their application has not yet been assessed, then it will be impracticable to produce evidence of receipt of such benefit in relation to the period of computation. The supplier should ask the client to produce any written acknowledgement of the application that they have received and clarify whether there is an alternative source of income from which their expenses are currently being met (see also paragraph 16 below). Where practicable, the supplier should later obtain confirmation as to whether the benefit was granted. If it was refused on means grounds, the supplier should reconsider whether or not the client was financially eligible. The supplier should not passport a client on the basis of Income Support, Income Based Jobseeker's allowance, Income Based Employment and Support Allowance or Guarantee Credit or NASS support (where applicable) without evidence of a live claim in payment.
15. As long as evidence is obtained of the main source of income, it will be unnecessary to carry on and obtain evidence of small additional amounts of income that are unlikely to affect eligibility. Where the client is in prison, it will be unnecessary to obtain documentary evidence of their prison income (although the amount stated by the client should be added in to the assessment) as the amounts that can be earned are strictly limited.
16. Some clients will state that they have no access to any income or capital. It would be for the supplier to decide whether such a statement was credible and whether or not it was therefore impracticable to obtain evidence of means. However, a note of the circumstances should be kept on the file. Clients without any income at all are likely to be those whose circumstances have recently changed. This might be where, for example, they have just separated from a partner and have applied for benefit or have just arrived in this country and applied for asylum. The supplier should enquire how the client is meeting their day-to-day expenses. If a client states that a relative or friend is supporting them, a letter from the relative or friend should be obtained identifying the nature and extent of support.