Request Reference: 177-12
Date of Response: 17/12/2012
Request
A copy of the guidance used to assess what income should be included in an
assessment, specifically redundancy payments.
A copy of the appeals process.
Information on whether or not you can be re-imbursed for the cost of a telephone call if
it is the case that an assessment is incorrect.
Response
Guidance which confirms what income should be taken into account for a means-tested student
finance assessment is available through our Practitioners’ Support website, which is accessible
via our corporate website. As this information is reasonably accessible to you by other means,
it is considered exempt from disclosure under section 21(1) of the FOIA. Please refer to the
Assessing
Financial
Entitlement
Guidance
Chapter
2012/13
(http://www.practitioners.slc.co.uk/media/178871/assessing_financial_entitlement_12_13_final_1-1_april_2012.pdf), specifically the household income section starting at paragraph
212 on page 70, and Annexes A to D starting on page 84. Please note that the lists are not
exhaustive and should be viewed as guidance only.
In relation to redundancy payments, the Guidance Chapter does not specifically refer to
redundancy payments, however these are included in taxable income as part of “other income
and lump sums”, which is included in Annex A referred to above.
An extract of our internal guidance confirming the position with redundancy payments is
provided below:
“When deciding which income should be taken into account, you must look at whether
the source of income is taxable, not if the amount is within the taxable threshold. E.g.
Redundancy payments are not taxed if less than £30,000 but we should still take this sum
of money into account as the money has come from a taxable source. ONLY WHERE
TAX WOULD NEVER BE PAID SHOULD YOU DISREGARD THE INCOME.”
(Source: Extract from 12/13 Decision Matrix v1.5, pages 64-65.)
The reasoning behind how we treat redundancy payments can be explained as follows.
For student support purposes, taxable income is defined by Schedule 4, paragraph 1(o) of the
Education (Student Support) Regulations 2011 (the “2011 Regulations”) as:
(o)“taxable income” means, in relation to paragraph 4, in respect of the academic year for
which an application has been made under regulation 9 and, in relation to paragraph 5, in
respect (subject to sub-paragraphs (3), (4) and (5) of paragraph 5) of the prior financial
year, a person’s taxable income from all sources computed as for the purposes of—
(i)the Income Tax Acts;
(ii)the income tax legislation of another Member State which applies to the person’s
income; or
(iii)where the legislation of more than one Member State applies to the period, the
legislation under which the Secretary of State considers the person will pay the largest
amount of tax in that period (except as otherwise provided in paragraph 5)
except that no account is taken of income referred to in sub-paragraph (2) paid to another
party.
Paragraph 5(1) of Schedule 4 of the 2011 Regulations provides:
5.—(1) For the purposes of determining the taxable income of an eligible student’s parent,
(“A” in this paragraph) any deductions which fall to be made or exemptions which are
permitted—
(a)by way of personal reliefs provided for in Chapter 1 of Part VII of the Income and
Corporation Taxes Act 1988(7) or, where the income is computed for the purposes of the
income tax legislation of another Member State, any comparable personal reliefs;
(b)pursuant to any enactment or rule of law under which payments which would otherwise
under United Kingdom law form part of a person’s income are not treated as such; or
(c)under sub-paragraph (2),
must not be made or permitted.
The Income Tax Acts are defined in the Income Tax Act 2007 as “all enactments relating to
Income Tax” and therefore includes the Income Tax (Earnings and Pensions) Act 2003 (“ITEPA
2003”). Redundancy payments may be made under either a statutory or non-statutory scheme,
and are covered by section 401 of the ITEPA 2003 as explained on the HMRC website:
“EIM13760 explains that statutory redundancy payments fall within Section 401 ITEPA
2003. Payments made as compensation for loss of employment through redundancy from
these non- statutory schemes also fall only into Section 401 ITEPA 2003 following the
decision in Mairs v Haughey (66TC273), see EIM13750.”
In general, section 401 of the ITEPA 2003 covers certain payments which are not charged to tax
under other provisions. If they come under s401 redundancy payments are generally exempt
from tax up to a limit of £30,000.
Accordingly, redundancy payments are considered to be taxable income, as they have a
threshold for tax and are not wholly exempt. We are therefore not able to disregard particular
items of income because they are below a certain taxable threshold. The important factor is the
fact that the payments are potentially taxable. For the same reason, income from employment
which is below the taxable threshold is not disregarded for household income purposes.
Appeals Process - Our appeals process, for English domiciled students only applying through
Student Finance England, is available on our corporate website. This information is therefore
considered exempt from disclosure under section 21(1) of the FOIA, as it is considered
reasonably accessible to you by other means. Please refer to our appeals process leaflet,
which can be found at the following internet link:
http://www.slc.co.uk/media/270043/appeals.pdf
Reimbursement of cost of telephone calls – I can confirm that there is no documented
procedure covering this, however any such request can be submitted, outlining the reason for
the request (for example, dissatisfied with customer service, or advisor unable to deal with
enquiry adequately) and providing the relevant evidence of the cost of the call (for example,
redacted telephone bill showing date, number called and cost). Any such request will be
considered on an individual basis.