After regulation 43 of the principal Regulations (notional capital) there shall be inserted the following regulation—
Diminishing notional capital rule
(43A)
(1) Where a claimant is treated as possessing capital under regulation 43(1) (notional capital), the amount which he is treated as possessing—
(a) in the case of a week that is subsequent to—
(i) the relevant week in respect of which the conditions set out in paragraph (2) are satisfied, or
(ii) a week which follows that relevant week and which satisfies those conditions, shall be reduced by an amount determined under paragraph (3);
(b) in the case of a week in respect of which paragraph (1)(a) does not apply but where—
(i) that week is a week subsequent to the relevant week, and
(ii) that relevant week is a week in which the condition in paragraph (4) is satisfied,
shall be reduced by the amount determined under paragraph (4).
(2) This paragraph applies to a benefit week where the claimant satisfies the conditions that—
(a) he is in receipt of housing benefit; and
(b) but for regulation 43(1), he would have received an additional amount of housing benefit in that week.
(3) In a case to which paragraph (2) applies, the amount of the reduction for the purposes of paragraph (1)(a) shall be equal to the aggregate of—
(a) the additional amount to which sub-paragraph (2)(b) refers, and
(b) where the claimant has also claimed community charge benefit, the amount of any community charge benefit to which he would have been entitled but for the application of regulation 33(1) of the Community Charge Benefits (General) Regulations 1989 (notional capital) .
(4) Subject to paragraph (5), for the purposes of paragraph (1)(b) the condition is that the claimant would have been entitled to housing benefit in the relevant week but for regulation 43(1), and in such a case the amount shall be equal to the aggregate of—
(a) the amount of housing benefit to which the claimant would have been entitled in the relevant week but for regulation 43(1);
(b) if the claimant would, but for regulation 33(1) of the Community Charge Benefits (General) Regulations 1989, have been entitled to community charge benefit or to an additional amount of community charge benefit in respect of the benefit week, within the meaning of regulation 2(1) of those Regulations (interpretation), which includes the last day of the relevant week, the amount (if any) which is equal to—
(i) in a case where no community charge benefit is payable the amount to which he would have been entitled, or
(ii) in any other case, the amount equal to the additional amount of community charge benefit to which he would have been entitled;
and, for the purposes of this sub-paragraph, if the relevant week is a part-week, that amount shall be determined by dividing the amount of the community charge benefit to which he would have been so entitled by the number equal to the number of days in the part-week and multiplying the quotient so obtained by 7.
(5) The amount determined under paragraph (4) shall be re-determined under that paragraph if the claimant makes a further claim for housing benefit and the conditions in paragraph (6) are satisfied, and in such a case—
(a) sub-paragraphs (a) and (b) of paragraph (4) shall apply as if for the words “relevant week” there were substituted the words “relevant subsequent week”; and
(b) subject to paragraph (7), the amount as re-determined shall have effect from the first week following the relevant subsequent week in question.
(6) The conditions are that—
(a) a further claim is made 26 or more weeks after—
(i) the date on which the claimant made a claim for housing benefit in respect of which he was first treated as possessing the capital in question under regulation 43(1),
(ii) in a case where there has been at least one re-determination in accordance with paragraph (5), the date on which he last made a claim for housing benefit which resulted in the weekly amount being re-determined, or
(iii) the date on which he last ceased to be entitled to housing benefit,
whichever last occurred; and
(b) the claimant would have been entitled to housing benefit but for regulation 43(1).
(7) The amount as re-determined pursuant to paragraph (5) shall not have effect if it is less than the amount which applied in that case immediately before the re-determination and in such a case the higher amount shall continue to have effect.
(8) For the purposes of this regulation—
(a) “part-week” means a period of less than a week for which community charge benefit is allowed;
(b) “relevant week” means the benefit week or part-week in which the capital in question of which the claimant has deprived himself within the meaning of regulation 43(1)—
(i) was first taken into account for the purpose of determining his entitlement to housing benefit; or
(ii) was taken into account on a subsequent occasion for the purpose of determining or re-determining his entitlement to housing benefit on that subsequent occasion and that determination or re-determination resulted in his beginning to receive, or ceasing to receive, housing benefit;
and where more than one benefit week or part-week is identified by reference to heads (i) and (ii) of this sub-paragraph the later or latest such benefit week or, as the case may be, the later or latest such part-week;
(c) “relevant subsequent week” means the benefit week or part-week which includes the day on which the further claim or, if more than one further claim has been made, the last such claim was made.