Calculation Of End Of Year (EOY) Income Limits (Info)
This uses the income limits calculated for the year that EOY 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 EOY income limit.
The calculation follows 3 steps
Step 1 – Adjust the income limit amounts for
each year where the award has been calculated using CY income
Step 2 – Compare the income limits for each
year
Step 3 – Establish the final EOY income
limits
If either year’s award was calculated using 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
Otherwise
- 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
Otherwise
- The higher amount is noted
Step 3 – Establish the final EOY 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
Otherwise
- The amounts from Step 2 are the final EOY Upper and Lower Limit amounts for the year
Example: See Worked Example For The Calculation Of Income Limits
