Reasonable Living Expenses Guidelines
These guidelines as to what constitutes a reasonable standard of living and reasonable living expenses have been prepared by the ISI in accordance with section 23 of the Personal Insolvency Act 2012.
They are intended to give direction to Approved Intermediaries and guidance to Personal Insolvency Practitioners in assessing, for relevant provisions of that Act, what may be considered ‘reasonable’ in the context of a standard of living and living expenses.
Under the model developed by the ISI, reasonable living expenses are the expenses a person necessarily incurs in achieving a reasonable standard of living, this being one which meets a person’s physical, psychological and social needs.
Reasonable living expenses will vary depending on a number of factors such as the particular composition of a household and the need for a car. Beyond that, when determining reasonable living expenses, provision needs to be made for reasonable housing costs in terms of rent or mortgage payments as well as for reasonable payments in respect of childcare where this expense arises.
The figures used in these guidelines have unique application to personal insolvency and are not intended to be used for purposes other than the stated purposes of these guidelines under the Personal Insolvency Act.
Update to the Reasonable Living Expenses Guidelines
In preparing the guidelines, the Act requires the Insolvency Service to have regard to a number of matters including the Consumer Price Index (CPI). Initial guidelines were published as part of the launch of the ISI’s information campaign in April 2013. Since the April publication, the Vincentian Partnership for Social Justice has updated its research to reflect CPI information to March 2013.
In June 2013 the ISI published an updated guide to reflect the CPI adjustment and so ensure that practitioners will be using the most up-to-date information available. The Act requires the ISI to issue guidelines at intervals of such length, not to be more than one year, as it considers appropriate. It is the intention of the ISI to reissue these guidelines annually, reflecting the CPI adjustments. The updated guide also addresses an anomaly that had been contained in the original guide in respect of food costs within two parent families.
The overall impact of these changes is not material and ensures that the analysis is both up-to-date and accurate. While CPI adjustments for individual categories of expenditure differ, the net impact for a single individual with a car results in their ‘set costs’ increasing by 1.5% when compared to the figures contained in the April guide.
A comprehensive guide is available for download here