This is an extract from an Age Concern factsheet which summarises the CRAG regulations in plain English
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7.2 One of a couple remaining in the family home - income
If you are married or civil partners and your spouse who is in a home receives an occupational pension, personal pension or payment from a retirement annuity contract, then half this money can be paid to you by your spouse/civil partner. If so, the local authority has to disregard the amount passed back to the spouse when calculating how much your spouse/civil partner should pay towards the costs of their care in a home.
If you do receive half your spouse/civil partner’s income from these sources, it may affect your entitlement to means tested benefits such as Pension Credit - because this amount will now count as part of your income.
This disregard by the local authority does not apply to partners who are not married or in a civil partnership, which can cause difficulties for such partners if the person living in a care home has more resources than their partner remaining at home.
Unmarried partners can ask the local authority to use its discretionary power to vary the amount of the personal expenses allowance - that is, the amount of £20.45 per week which it must ignore from the resident’s income. By varying the personal expenses allowance, your partner would be able to pay some of their income to you. Because this power is discretionary, the local authority may - but does not have to - do this.
If the local authority does use its discretion, any income which you receive might affect other benefits to which you might be entitled - such as Pension Credit or Council Tax Benefit."
Also have a look at this factsheet from Age Concern which goes into more detail:-
http://www.ageconcern.org.uk/AgeConcern/Documents/FS39PAYINGFORCAREAPR07.pdf