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Notes for Guidance - Common Financial Tool

Notes for Guidance explaining the information and evidence requirements to support debt solution applications

2. Household composition


2.1 Experience has shown that a comprehensive understanding of the household income and expenditure position leads to the most effective outcome and accurate determination of the available income for any contribution. It is in the interest of both creditors and debtors that an accurate calculation is completed.

2.2 If an accurate calculation is not confirmed, this may lead to a contribution amount being set that is either, too large and unsustainable and therefore, unfair to the debtor, or less than could be paid, which would deliver an unfair outcome for the debtor’s creditors.

2.3 The CFT is designed to capture the full household income and expenditure including that attributed to a debtor’s partner or other non-dependant household members. It is desirable to obtain these details in each case and money advisers/ trustees should explore the entire household financial position in each case and obtain this wherever possible.

2.4 Circumstances do vary from case to case, and it may not always be possible or practicable to obtain the full household income and expenditure details.

2.5 As an example, money adviser/trustee may encounter circumstances where the partner of a debtor might be dis-inclined to volunteer information relating to their own income or expenditure as they feel that they have no part in the debtor’s financial position.

2.6 In these circumstances, money advisers/trustees should record, as part of the CFT assessment, the reasons that the full household circumstances have not been used in calculations.

2.7 It is important that any decision not to use the entire household financial position should result from individual circumstances rather than the standard practice adopted by any money adviser/trustee or organisation.

2.8 It is feasible that two similar household circumstances may be encountered, with partner income information not available in only one case. The approach adopted may result in quite different outcomes in terms of level of surplus income. In the interest of fairness for all parties, it is important that reasonable efforts are taken to achieve an assessment that is both transparent and based on a clear methodology.

2.9 A clear rationale must be set out advising the basis of the income and expenditure calculation relating to the debtor. Where the partner’s income is not available, a calculation must be completed and set against the first adult household allowance for the purposes of establishing whether trigger figures have been breached. However, the amount allowed for essential expenditure must reflect a reasonable contribution for the debtor which takes account of the household composition. For example, it may be reasonable to assume a 50% contribution to housing and utility costs if the debtor has a partner but details of their partner’s income are not known.

2.10 This approach also applies in cases where all that is known is that the debtor makes a lump sum payment towards the general running costs of the household.

2.11 Where the entire household income is known, the CFT assessment will reflect the household position. However, the excess income figure calculated relates to the household and does not indicate the contribution that would be expected from the debtor. A fair and reasonable approach in these circumstances is to compare the debtor’s income to that of the total household, producing a percentage figure. That same percentage would then be applied to the total household income surplus to calculate the debtor’s surplus income.

2.12 This approach results in a proportionate allocation of surplus income and ensures that the debtor isn’t prejudiced in circumstances where a partner with a higher income creates an inflated household excess income figure.


2.13 Where an adult non-dependant with earnings does not contribute towards household income, it may impact on the debtor’s current position. Circumstances should, therefore, be explored through further discussions with the debtor.

2.14 For example, the existence of an adult non-dependant in a household disqualifies the debtor from a single person’s council tax allowance, resulting in a greater liability. It may, therefore, be appropriate for an adult non-dependant with earnings to assume responsibility for these costs.

2.15If the adult non-dependant has no earnings, they may have the characteristics of a dependant on the debtor. If this impacts upon the allowances used for calculating a contribution, an explanation of the circumstances should be provided.

Single person in a household

2.16 Where the debtor is a single non-householder, living in the family home and contributing towards the household income, the calculation should demonstrate how that income contributes towards each of the individual trigger figures. If the combined household income is known, an assessment should be made based on the full household position. Where it is not known, the assessment should be made based on a first adult’s allowance.

2.17 The example below is based on a debtor living at home with parents where the total household income is not known.

Single person living at home with parents

Table 1 - Household expenses

Budget Field

Monthly Claim

Amount Approved

Household Allowance*
(Based on First Adult)

Essential Expenditure











£125 (no vehicle)





Other Expenditure



















Table 2 - Contribution Calculations - Monthly

Total Income


Total Expenses


Total Approved Expenses


Surplus Income


Dependent children

2.18 The definition of a dependent child for the purpose of assessing household income has been agreed as follows:

  • A child under 16 (or older if they have remained in approved education or training) that a debtor is entitled to claim child benefit for
  • A child under 16 for whom a debtor which has shared caring responsibilities for but doesn’t reside in their home on a full-time basis

2.19 A dependent child does not include any young adults in the household who have access to their own means of support. This includes, for example, a family member who has been denied access to certain state benefits through a sanction or any other restriction resulting from their own actions.

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