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HMRC internal manual

Business Income Manual

Care providers: qualifying care relief: calculation of qualifying amount

S808-S811, S821 Income Tax (Trading and Other Income) Act 2005

An individual’s qualifying amount for a tax year is comprised of the following.

  • Their share of the fixed amount of £10,000. Where a residence is used for the provision of care by more than one individual, each receives an equal share of the fixed amount. If the income period (which is the basis period for the year for trading income or tax year in non-trade cases) is not a full year, the fixed amount is adjusted proportionately.
  • Weekly amounts for each cared-for child or adult based on the number of weeks during the income period for the tax year. The weekly amounts are:

    • £200 for each child aged under 11 years of age
    • £250 for each child reaching 11 years or older
    • £250 for each adult

A week is a period of seven days beginning on a Monday. Periods of care of less than a week are treated as a full week. A week in which an income period ends is treated as belonging to that period.

An individual’s qualifying amount for a period of account is comprised of the following:

  • their share of the fixed amount for the tax year in which the period ends (calculated as above),
  • for each of the tax years in which the period of account falls, the weekly amounts for each child or adult for the part of the period falling in the tax year.

The legislation provides for the level of the fixed and weekly amounts to be varied.

Foster care of a parent and child

We understand that some local authorities have schemes whereby a child, who is a parent, is placed in foster care. The foster carer effectively cares for the parent and her baby, but only the parent is technically placed in care.

We are informed that the payments made to the foster carer in these circumstances are invariably intended to cover accommodation and care provided to parent and baby. On that basis, we are content for tax purposes to treat the parent and each baby as being in foster care. The foster carer can claim a weekly amount per child for each of them when calculating their qualifying amount.

Specialist foster carers

There are foster carers who care for children with a disability or other special needs (‘specialist foster carers)’. Some specialist foster carers may incur specific expenditure that is clearly not of a type covered by normal maintenance, such as for special equipment. In this case, the amount of actual expenditure can be added to the qualifying amount.

In other cases, the specialist carer’s expenses may be exceptional by degree rather than type. In such cases, there is no practicable way of measuring the exceptional expenditure separately. Such carers should record their actual expenses for a set period, and use the resulting data as a basis for calculating the regularly recurring expenses for the full year which can then be added to the qualifying amount.

If the specialist carer receives amounts in excess of the qualifying amount, then it is not necessary to remove any existing special arrangement.