Guidance

A11/2025 The Social Security (Income and Capital Disregards) (Amendment) (No. 2) Regulations 2025

Updated 30 September 2025

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Who should read

All Housing Benefit colleagues and wider if appropriate.

Action

For information.

Subject

The Social Security (Income and Capital Disregards) (Amendment) (No. 2) Regulations 2025

Guidance Manual

The information in this circular does affect the content of the Housing Benefit manual. Please annotate this circular number against Chapter BW1: paragraphs 1.180, 1.216, 1.249, 1.280, 1.630, 1.680 and Chapter BW2: paragraphs 2.20, 2.130, 2.269, 2.531, 2.660, 2.670 and Annex B and Chapter BP1: paragraphs 1.180, 1.280, 1.680 and Chapter BP2: paragraphs 2.20, 2.130, 2.531, 2.612, 2.670 and Annex B.

Queries

Extra copies of this circular/copies of previous circulars can be found at Housing Benefit for local authorities: subsidy circulars.

For queries about the:

Recipients may freely reproduce this circular.

Introduction

1. This circular provides details of The Social Security (Income and Capital Disregards) (Amendment) (No. 2) Regulations 2025 (SI 2025/778) which amends the Housing Benefit Regulations 2006 (SI 2006/213) and the Housing Benefit (Persons who have reached the qualifying age for state pension credit) Regulations 2006 (SI 2006/214).  

2. These changes came into force on 22 July 2025.

Background

3. The 1988 Criminal Justice Act provides compensation when a person has been convicted of a criminal offence and: 

  • when later their conviction has been reversed, or
  • they have been pardoned on the grounds that a new or newly discovered fact shows beyond reasonable doubt that there has been a miscarriage of justice

4. The Act applies across the United Kingdom with the devolved governments in Scotland and Northern Ireland administering their own schemes. Although the approach in delivering the schemes is broadly similar, there are differences between the Scottish scheme compared to the others.

Miscarriage of justice compensation schemes

England and Wales

5. To be eligible to receive compensation in England and Wales, individuals must apply within two years of having their conviction reversed or being pardoned. If they have had their conviction reversed or been pardoned, based on new or previously discovered fact, they must not be responsible for the non-disclosure of the new or previously discovered fact. 

6. The maximum amount of compensation payable is up to £1 million in cases where an applicant has been imprisoned for 10 years or longer, or up to £500,000 in all other cases.  

7. The compensation awarded is usually made up of two parts:  

  • a non-pecuniary award which is designed to compensate the applicant for loss of liberty, hardship, distress and injury to feelings, inconvenience, damage to reputation and psychiatric damage, if any  

  • a pecuniary award which compensates the applicant for loss of earnings (past and future), expenses (including expenses incurred by relatives and friends due to the miscarriage of justice) and legal costs related to the miscarriage of justice  

8. The Justice Secretary can also decide to make a discretionary extra statutory payment to someone who can demonstrate beyond reasonable doubt not to have committed the offence but who may otherwise not fall within the strict section 133 test. This discretion will only apply in exceptional cases.

Scotland

9. The Scottish miscarriage of justice compensation scheme is the same as the scheme offered in England and Wales, however there are two main differences. The first is that there is no limit on the amount of compensation that can be awarded in an individual case and the second is that the time limit for submitting an application is up to three years after the conviction is overturned, instead of two. 

10. Scotland also provides additional compensation through an ex-gratia scheme for those who have spent time in custody after a wrongful conviction or charge because the police or another public authority did something seriously wrong, or there were exceptional circumstances that justify the payment of compensation.

Northern Ireland

11. The Northern Ireland miscarriage of justice scheme is very similar to the scheme operated in England and Wales. Although a disregard is not provided for payments made to successful applicants resident in Northern Ireland, a disregard is provided for payments made to successful applicants through the Northern Ireland scheme who are resident in Great Britain.

Amendments to the Housing Benefit Regulations

12. The following paragraphs provide more details about the amendments made by SI 2025/778 to SI 2006/213 and SI 2006/214.

Definitions

13. A definition for miscarriage of justice compensation payment which means a payment made under section 133(1) of the Criminal Justice Act 1988 or any other compensation payment made by the Secretary of State, the Scottish Ministers or the Department of Justice in Northern Ireland for a miscarriage of justice or for being wrongfully charged with a criminal offence is inserted into regulation 2 of SI 2006/213 and SI 2006/214.  

14. An amendment is also made to the definition of a qualifying person in Regulation 2 so that it includes a reference to a miscarriage of justice compensation payment.

Amendment to income and capital disregards

15. SI 2025/778 introduces new disregards for payments made under a miscarriage of justice compensation scheme. Details of the changes are in the following paragraphs.

Effect on income and notional income 

16. Payments made under a miscarriage of justice compensation scheme are disregarded as income and notional income for the purposes of SI 2006/213. 

Effect on capital and notional capital 

17. Payments made under a miscarriage of justice compensation scheme are disregarded as capital indefinitely for the purposes of SI 2006/213 and SI 2006/214.  

18. Payments made under a miscarriage of justice compensation scheme are also disregarded as notional capital for the purposes of SI 2006/213. 

Non-dependants’ income  

19. Payments made from a miscarriage of justice compensation scheme are disregarded when calculating a non-dependent’s weekly income in both SI 2006/213 and SI 2006/214.

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