Hi Sue,
Sorry but you will need to ascertain under which CSA the MA has been made, old or new rules. Then it would be possible to consider the disregards & variations. The flat certainly appears to be in play here and if he does go self-employed his service pension would be taken into consideration and difficult ofset as and when he starts making a profit from teh business, should he choose to go ahead.
Judging by the level of income and the flat rate it would appear to me that the NRP falls under the old system. Can one assume again that the service pension is based on a pension for the purposed of a medical discharge, that being tax exempt. Also the husband if going self-employed may need to consider the affects this may have on his war pension, if any. As I am sure you are aware there are more issues here, so I would seek to ascertain what MA is in place though you could while waiting for a response assess the families income and circumstances under both rules and take into account adjustments for any 2008 rules that may apply.
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