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HMRC internal manual

Employment Status Manual

Particular occupations: careworkers - payments under Court of Protection Order or from trust fund

Payments towards the cost of maintenance of a husband, wife, or other close relative or dependant out of the income of a severely incapacitated person, who receives funds under an Order of the Court of Protection, are regarded as voluntary payments and not as income of the recipients. Therefore, there will be no tax or NICs consequences on such payments made for caring duties. Similarly, where payments emanate out of a Trust Fund set up for this purpose there is unlikely to be an enforceable contract, therefore, there should be no question of tax being assessable as employment income or of a liability for Class 1 NICs.

Caring activity under these circumstances would not amount to gainful employment so there will be no liability for Class 2 NICs. The services provided are unlikely to be regarded as commercial in nature or amount to valuable consideration so there will not be a charge to tax on trade profits or on income not otherwise charged to tax - see BIM52785. Refer any cases of doubt to Status & Employment Rights Technical Team in the first instance who , if required, will liaise with CT & VAT Group (Business Profits & Relief).