This seems possibly generous on the part of HMRC so I am suspicious of such generosity.

My client is approaching 65 and has custody of two grandchildren. His partner works. He is on old style incapacity benefit which doesn't count as income for Tax Credits, but his SRP will do. They would not qualify for Pension Credits anyway.

There may not actually be any financial advantage to him if he does defer his SRP, in that the gain from Tax Credits will no way near compensate for no SRP, but the Tax Credits regs say that if you defer your SRP (Category A or B)it does not count as notional income.

Is this correct? As I say I find it suspect............

Ah but tax credits imports all these tax law concepts and tax law does not seek to tax you very often when you just defer your income (because they get you in the end!).

So it is true.

We have written two articles on this on our website the second of them (with a link to the first) is here:

http://www.litrg.org.uk/news/latest.cfm?id=323

Hope this helps.

Thank you for that John. I will get back to the client.