How the means test works, and why it is not the law

Written and reviewed by Patricia Hughes · Last updated 29 August 2026 · last reviewed 29 August 2026 · rates for 2026/27

Most English councils work out how much of your income to take into account using a standard spreadsheet model produced by the Department for Education.

I could not find a law requiring it. I went looking because I had been referred back to a policy I had already read, and I wanted to know whether that policy was a rule my council had to follow or a choice it had made.

Here is how far behind it has fallen. The model measures your basic living costs against Income Support rates. Income Support is a legacy benefit that is largely closed to new claims, and most of the people it once covered are now on Universal Credit.

So the yardstick at the centre of the calculation is one that most households can no longer even claim.

I was on Universal Credit when my own allowance was set. If my council used this model, my basic living costs were measured against a benefit I could not have claimed. I was never able to reproduce my own figure from one published formula, so I cannot tell you whether it did.

At least one council publishes the model in its own words as non-statutory guidance, which is worth knowing if yours presents it as a rule it has to follow.

It is also worth knowing that a means test is not in itself unlawful. When a blanket percentage deduction was struck down, the court upheld the means-test methodology itself.

The steps

1. Add up your countable income. Earnings after tax, pensions, maintenance you receive, income from a lodger, and most benefits.
2. Ignore 20% of it. A fifth of your income is disregarded.
3. Subtract your allowable outgoings. Rent or mortgage, council tax, childcare, essential loan repayments, maintenance you pay out, pension contributions, plus a figure for basic living costs, calculated as the Income Support rates for a household your size plus 25%.
4. What is left is your disposable income.
5. Some or all of it is treated as your contribution towards the child's costs, and taken off the maximum.

The mistake that costs people the most

Taking the 20% disregard off at the wrong point in the sum.

The difference is large. Take a household with £3,000 a month of income and £2,000 a month of allowable outgoings:

• Correct: £3,000 × 0.8 = £2,400, then − £2,000 = £400 disposable
• Wrong: £3,000 − £2,000 = £1,000, then × 0.8 = £800 disposable

Done the wrong way round, this household is assessed as able to contribute twice as much, and the allowance drops accordingly. If you have a written breakdown, check which order yours was done in.

What counts and what does not

Counted: earnings (both partners), self-employed drawings, employer sick pay, pensions, most benefits, Child Benefit for your other children, savings interest, lodger and property income, maintenance you receive.

Ignored: disability benefits for the child (DLA or PIP), Guardian's Allowance, criminal injuries compensation, fostering income for other children you still foster, the special guardianship allowance itself, and the childcare element of Working Tax Credit.

The Child Benefit rule confuses almost everybody, including social workers: Child Benefit for your other children counts as income; Child Benefit for the child this assessment is about does not. That child's Child Benefit is only ever dealt with as a separate deduction, if at all, and whether it should be deducted is itself contested.

The step nobody publishes

There is no published national rule for how much of your disposable income a council takes off the allowance. Some take it pound for pound, some take a percentage, some ignore anything under a threshold. Policies genuinely differ, and no one has published a national figure.

So ask yours which it uses. If a figure has been put to you, that question alone often produces the breakdown you have been asking for.

What you can check, and what you have to ask for

Everything in the model above is checkable, arithmetic included. The 20% comes off your income before your outgoings, and no law requires any of it.

Which model your council actually uses, and what share of your disposable income it takes at the end, are published nowhere. Those are your two questions.