the IPA has assessed his net monthly income at about £1,904 and his allowable living expenses as £1,800, with a monthly IPA of £104.
The IPA claims 100% of income over and above the allowable living expenses. (above are rough figures I don't have actual in front of me)
I am trying to allow my client to work more and retain the benefit, otherwise he has no incentive to do any additional work, in fact he may then decide to work enough just to make his allowable living expenses, claim reduced earnings and have the IPA reduced to zero.
With respect there seems to be two options;
a) Stay a sole trader, but make pension contributions reducing any earners to the net assessable income of £1904 so he can maintain the IPA payments, but at least he is benefiting by building a pension pot
this is a link to government information on pensions and insolvency that seems to suggest this would work
b) after 31/03/2013 he will be released from bankruptcy conditional on his agreeing to the IPA. However being out of bankruptcy, he could then incorporate his trade as a limited company. All earnings transfer to the company and he can limit his remuneration to the assessed level of £1,904, leaving any additional earnings inside the company to be drawn after the 3 year IPA expires. As this will be after his release from bankruptcy I don't see that the trustees will have any claim on the company and therefore this should safeguard any additional earnings over and above £1,904. This is the preferred option.