Miscellaneous (A to B): Income limits - calculation of end of year limits (Info)
This uses the income limits calculated for the year that end of year income limits are required for, and those for the year after. This is because the income for the first year will affect not only the award calculation for that year (as CY income), but also the award calculation for the following year (as PY income).
The aim is to identify which award is first affected by a change in the income for the earlier year and use the income limit for that year as the end of year income limit.
The calculation follows three steps.
Step 1 - Adjust the income limit amounts for each year where the award has been calculated using Current Year income
If either year’s award was calculated using Previous Year (PY) income, the Upper limit for the year is adjusted as follows
- unless the limit is zero, deduct the Income Increase Allowance amount for the year.
Step 2 - Compare the income limits for each year
The Upper limits (after any adjustment from step 1) are compared and
- if one Upper limit is zero and the other greater than zero, the higher amount is noted
- if both Upper limits are the same, the amount is noted
- in any other circumstances, the lower amount is noted.
The Lower limits (after any adjustment from step 1) are compared and
- if one Lower limit is zero and the other greater than zero, the higher amount is noted
- if both Lower limits are the same, the amount is noted
- in any other circumstances, the higher amount is noted.
Step 3 - Establish the final end of year income limits
The Upper and Lower limit amounts noted in step 2 are compared and
- if the Upper limit is greater than zero and less than the Lower Limit, the Lower Limit is changed to the lower of the original Lower Limit amounts from the two years
- in any other circumstances, the amounts from Step 2 are the final end of year Upper and Lower Limit amounts for the year.