The section of the TC Technical manual, from our CD-Rom, dealing with calculation of income (the last sentence is the relevant bit) says:
"The manner in which income of a claimant or, in the case of a joint claim, the aggregate income of the claimants, is to be calculated for a tax year for the purposes of Part 1 of the Act is as follows.
Step One
Calculate and then add together n the pension income (as defined in regulation 5(1))
n the investment income (as defined in regulation 10),
n the property income (as defined in regulation 11),
n the foreign income (as defined in regulation 12) and
n the notional income (as defined in regulation 13)
of the claimant, or, in the case of a joint claim, of the claimants.
If the resulting total amount of step one is £300 or less, it is treated as nil.
If the resulting total amount of step one is more than £300, only the excess is taken into account in the following steps.
Step Two
Calculate and then add together n the employment income (as defined in regulation 4),
n the social security income (as defined in regulation 7),
n the student income (as defined in regulation 8) and
n the miscellaneous income (as defined in regulation 18)
of the claimant, or in the case of a joint claim, of the claimants.
Step Three
Add together the resulting total amounts of Steps One and Two.
Step Four
Calculate the trading income (as defined in regulation 6) of the claimant, or in the case of a joint claim, of the claimants.
Add the resulting total amount of this step to the total amount produced by Step Three,unless there has been a trading loss in the year.
If there has been a trading loss in the year, subtract the amount of that loss from the total amount of Step Three."
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