Financial assessment and verification of income

In assessing the disposable income of your client, and where appropriate their partner’s circumstances, reference should be made to the guidance. 

Income is likely to come from one of three sources:

• Employment
• Self-employment
• Benefits (either passported or non-passported)

You may also encounter clients who declare no income. It is important that your client is asked to explain on what basis they support themselves and to record this information.

Good information about income and outgoings can be obtained from a bank statement, so it is always advisable to ask your client to bring in a current statement. If your client states that they have no bank account, you should decide if this is likely and record on file on what basis you accepted the position.

We have also set out details below of the types of documentation you may wish to see as an alternative to or in addition to a bank statement.

Remember that eligibility is based on your client’s disposable income over the last seven days.

As an alternative to a bank statement, you may also be satisfied if you were to see:

• A wage slip.
• A recent letter of appointment that confirms the salary.
• Other correspondence from an employer.
• The client’s most recent P60.

You should check that the income amounts shown on any bank statements are consistent with the income levels advised by your client.

With bank statements, it is important to remember that the only allowable deductions from pay are tax and national insurance. You should check always with your client that there are no significant deductions other than those allowed by regulation. When there are such deductions you should obtain additional documentary evidence such as payslips.

The following are helpful in evidencing income of your self-employed client:

• Business accounts
• Bank statements (personal and business)
• Recently audited accounts
• a recent self assessment tax return

In the absence of these, the onus is on your client to demonstrate their income to your satisfaction. We do not expect you to undertake detailed analysis of accounts, but we do expect you to have seen bank accounts to show the sort of income and capital being taken from the business to form a view of financial eligibility.

We are unable to check non-passported benefits which your client may receive. Details of these benefits are given in the Keycard.

Most benefits are paid directly into bank or post office accounts, so bank statements are once again a good source of information and verification. Alternatively, you may be able to see the most recent award letter or other correspondence from the Benefits Agency.

If your client tells you they have no income or capital, you should ask them why this is the case.  If they are not in custody or on remand, then why do they not have any income?  For example, have they applied for benefits, and these have not been awarded yet? You need to be satisfied that there is a credible reason for having no income.  In the online application, you must tell us:

• why they have no income
• how they were supported in the last seven days
• if they are supported by parents, family and/or friends.

If they are being supported by family and/or friends, you need to be satisfied with this explanation and that it meets with your knowledge of the client.  If you don’t think this explanation is plausible, then you could consider asking for written confirmation, where practical.  Either way, you should note this in your file.

If the applicant has a bank account, you should obtain a bank statement from the client to confirm the position. Again, if this is not provided by the client, make sure you tell us about the steps you have taken to obtain this.

Most of the population have bank accounts now, especially if they are earning wages or receiving benefits.  If your client tells you that they don’t have a bank account, you should explore this further with them and ask them how they receive any wages or benefits payments they may receive.  You need to be satisfied that there is a credible reason for not having a bank account and you should note this on the application.

Whilst it remains your responsibility to satisfy yourself that your client is financially eligible, we have a direct link with the Department for Work and Pensions which allows us to check cases where the client is receiving passport benefits. These are:

• Income support
• Income-based jobseeker’s allowance
• Income-related employment support allowance
• Universal Credit

When your client tells you they receive one of these benefits, we may be able to confirm this via the link and to inform you promptly of any information to the contrary from DWP records. To allow us to do this, you must provide the client’s national insurance number and date of birth.  You must also provide this information for any partner if the benefit is paid via them.

If the link is unable to confirm that your client is in receipt of the benefit, we will treat the income status as not yet having been verified and will contact you for further information.