Paragraph 5 Calculation of parent’s residual incomeI1
England and Wales
For the purposes of determining the residual income of an eligible student’s parent (“A”) there is deducted from A’s taxable income the aggregate of any amounts falling within any of the following sub-paragraphs (unless already deducted in determining taxable income)—
the gross amount of any premium or sum relating to a pension (not being a premium payable under a policy of life assurance) in respect of which relief is given under section 188 of the Finance Act 2004 or, where the income is computed for the purposes of the income tax legislation of a member State, the gross amount of any such premium in respect of which relief would be given if that legislation made provision equivalent to the Income Tax Acts;
in any case where income is computed for the purposes of the Income Tax Acts by virtue of sub-paragraph (7), any sums equivalent to the deduction mentioned in paragraph (a) of this sub-paragraph, provided that any sums so deducted do not exceed the deductions which would be made if the whole of A’s income were in fact income for the purposes of the Income Tax Acts;
where A is a parent student or A holds a statutory award, £1,130.
The Secretary of State may, for the purpose of enabling the eligible student to attend the course without hardship, ascertain A’s residual income for the financial year beginning immediately before the relevant year (“the current financial year”) if the Secretary of State is satisfied that—
where the eligible student’s household income is determined by reference to the residual income of A alone, the residual income of A for the current financial year is likely to be not more than 85% of the sterling value of A’s residual income for the prior financial year,
where the eligible student’s household income is determined by reference to the residual income of both parents, the aggregate of the residual incomes of A and the other parent for the current financial year is likely to be not more than 85% of the sterling value of the aggregate of the residual incomes of A and the other parent for the prior financial year, or
where the eligible student’s household income is determined by reference to the residual income of A and A’s partner, the aggregate of the residual incomes of A and A’s partner for the current financial year is likely to be not more than 85% of the sterling value of the aggregate of—
the residual income of A for the prior financial year applicable to A, and
the residual income of A’s partner for the prior financial year applicable to A’s partner.
In the event that sub-paragraph (2) or this sub-paragraph was applied in the previous course year of the current course, the Secretary of State may, for the purpose of enabling the eligible student to attend the course without hardship, ascertain A’s residual income for the current financial year if the Secretary of State is satisfied that—
where the eligible student’s household income is determined by reference to the residual income of A alone, the residual income of A for the current financial year is likely to be not more than 85% of the sterling value of A’s residual income for the preceding financial year,
where the eligible student’s household income is determined by reference to the residual income of both parents, the aggregate of the residual incomes of A and the other parent for the current financial year is likely to be not more than 85% of the sterling value of the aggregate of the residual incomes of A and the other parent for the preceding financial year, or
where the eligible student’s household income is determined by reference to the residual income of A and A’s partner, the aggregate of the residual incomes of A and A’s partner for the current financial year is likely to be not more than 85% of the sterling value of the aggregate of the residual incomes of A and A’s partner for the preceding financial year.
In a course year immediately following one in which the Secretary of State has ascertained A’s residual income for the current financial year under sub-paragraph (2) or (3) (as applicable), the Secretary of State must ascertain A’s residual income for the preceding financial year.
In a course year immediately following one in which the Secretary of State has ascertained A’s residual income for the preceding financial year under sub-paragraph (4), the Secretary of State must ascertain A’s residual income for the prior financial year.
Where A satisfies the Secretary of State that A’s income is wholly or mainly derived from the profits of a business or profession carried on by A, then any reference in this Schedule to a prior financial year means the earliest period of twelve months which ends after the start of the financial year immediately before the preceding financial year and in respect of which accounts are kept relating to that business or profession.
Where A is in receipt of any income which does not form part of A’s income for the purposes of the Income Tax Acts or the income tax legislation of a member State by reason only that—
A is not resident or domiciled in the United Kingdom, or where A’s income is computed for the purposes of the income tax legislation of a member State, not resident or domiciled in that member State,
the income does not arise in the United Kingdom, or where A’s income is computed for the purposes of the income tax legislation of a member State, does not arise in that member State, or
the income arises from an office, service or employment, income from which is exempt from tax in pursuance of any legislation,
A’s taxable income for the purposes of this Schedule is computed as though the income under this sub-paragraph were part of A’s income for the purposes of the Income Tax Acts or the income tax legislation of a member State, as the case may be.
Where A’s income is computed for the purposes of the income tax legislation of a member State, it is computed under the provisions of this Schedule in the currency of that member State and A’s income for the purposes of this Schedule is the sterling value of that income determined in accordance with the average rate published by His Majesty’s Revenue and Customs for the calendar year which ends before the end of the prior financial year.
Where one of the eligible student’s parents dies before or during the relevant year and that parent’s income has been or would be taken into account for the purpose of determining the household income, the household income is—
where the parent dies before the relevant year, determined by reference to the income of the surviving parent,
where the parent dies during the relevant year, the aggregate of—
the appropriate proportion of the household income determined by reference to the income of both parents, being the proportion in respect of that part of the relevant year during which both parents were alive, and
the appropriate proportion of the household income determined by reference to the income of the surviving parent, being the proportion in respect of that part of the relevant year after the death of the other parent.
Where—
the eligible student is studying two or more courses in the same service year,
one of the eligible student’s parents dies—
after the relevant year, but
during the course year for which household income was assessed in respect of a relevant year determined in accordance with paragraph 1(3), and
that parent’s income has been or would be taken into account for the purpose of determining the household income,
the household income is determined in accordance with paragraph (9)(b), but as if for “the relevant year” there were substituted “the period of multiple study”.
Where the Secretary of State determines that the eligible student’s parents are separated for the duration of the relevant year, the household income is determined by reference to the income of whichever parent the Secretary of State considers the more appropriate under the circumstances.
Where the Secretary of State determines that the eligible student’s parents have separated during the relevant year, the household income is determined by reference to the aggregate of—
the appropriate proportion of the household income determined in accordance with sub-paragraph (11), being the proportion in respect of that part of the relevant year during which the parents are separated, and
the appropriate proportion of the household income determined otherwise in respect of the remainder of the relevant year.
Where—
the eligible student is studying two or more courses in the same service year, and
the Secretary of State determines that the eligible student’s parents separated—
after the relevant year, but
during the course year for which household income was assessed in respect of a relevant year determined in accordance with paragraph 1(3),
the household income is determined in accordance with paragraph (12), but as if for “the relevant year” there were substituted “the period of multiple study”.
Where the eligible student is studying two or more courses in the same service year—
the reference in sub-paragraph (3) to the current course is a reference to whichever of those courses has the earliest course start date;
the references in sub-paragraphs (4) and (5) to a course year are to a course year of whichever of those courses has the earliest course start date.
Annotations
Commencement
- I1
Sch. 7 para. 5 in force at 1.9.2026, see reg. 1(1)(b)