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INCOME PAYMENTS ORDERS: WHAT CONSTITUTES INCOME?

In Raithatha v Williamson (a bankrupt) [2012] EWHC 909 (Ch), it was held that a bankrupt’s present entitlement to compel payment of pension benefits did fall to be included in the assessment of his income for the purposes of section 310 of the Insolvency Act 1986, which governs income payments orders. This issue recently came before the Court of Appeal in Horton v Henry [2016] EWCA Civ 989. At first instance, the judge declined to follow Raithatha [2012] and came to the contrary conclusion. The trustee in bankruptcy appealed and that appeal was dismissed by the Court of Appeal. As a matter of construction of section 310, a bankrupt’s contractual rights to draw down or crystallise his pension (which he has yet to exercise) do not fall within the definition of income of the bankrupt.

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