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Determination of income

Determination of student or contributor income

Definitions

'Gross Income' means annual income from all sources and includes -

  • taxable benefits in kind, within the meaning of section 2G of the Income Tax Act 1970; and
  • Social security benefits liable to tax, within the meaning of section 48 of the Income Tax Act 1970.

“Net Income" means gross income after deduction of the following:

  • the amount of any pension contribution for the benefit of a dependent, in respect of which relief is given against income tax;
  • the amount of any personal pension contribution, not falling within the above, in respect of which relief is given against income tax, but not exceeding in total 15% of the person's gross income;
  • the amount of any interest paid in respect of which relief is given against income tax but not exceeding in total 30% of the person's gross income.

Year of calculation of income

The calculation of an award will be based on the contributors' income for the tax year ending on 5 April, 2021.

If a contributor estimates that his or her income will fall below this figure by 20% or more during the year ending 5 April, 2021, for reasons beyond his or her control, the Department can re-assess the award based on the estimate for this year. Should the award be reassessed on this current year basis, this will continue for the duration of the course.

Estimated income figures will be verified at the end of each year and it is important to note that the level of support may need to be reduced or reclaimed should the estimate figures prove to be inaccurate.

Calculation of income of more than one person

If the income of more than one person is to be taken into account for the purposes of these Regulations:

  • the income of each person must be aggregated for the purpose of determining income; and
  • in determining net income, any deduction under paragraph 3 must be made once only against the aggregate income.

Assessment of income other than from employment

If the whole or a substantial part of a person's income derives wholly or partly from a business carried on by:-

  • the person;
  • a firm in which the person is a partner;
  • a company (other than a company quoted on a recognised stock exchange) of which the person is a substantial shareholder; or
  • from a trust of which the person is a beneficiary,

The declaration of the person's financial circumstances must be accompanied by the following accounts relating to the previous financial year:

  • trading and profit and loss accounts and balance sheet of the business, or
  • an income and expenditure account of the trust, and
  • In either case, a copy of the income tax computation.

The Department may require that the accounts and computation be produced or certified by an accountant.

The Department must assess the income of the person on the basis of the net profit of the business or trust in accordance with the accounts supplied, having regard to the share or interest of the person in the business or trust, except that:

  • provisions for depreciation and accounting adjustments on the disposal of assets may be adjusted if it appears to the Department that they do not reasonably relate to the value of the assets or accord with generally accepted accounting practices;
  • trading losses incurred during the year under assessment, or brought forward from a previous year, are not permitted to be set off against total income;
  • if the person has a minority interest only in a business and appears to the Department to exercise no, or no significant, influence over the conduct of the business or the distribution of its profits, the assessment must be limited to the dividends, salary, fees and other payments receivable by the person;
  • Provisions or accounting adjustments that are exceptional or extraordinary may be adjusted by the Department if in the view of the Department they do not result in a reasonable and fair calculation of net profit or income.

In this paragraph "financial year", in relation to a business or trust, means a year or other period (not less than 9 months and not more than 15 months), in respect of which the accounts of the business or trust are made up.

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