Part 7Income charged under this Act: rent-a-room and F1qualifying care relief
Chapter 1Rent-a-room relief
Introduction
784Overview of Chapter 1
1
This Chapter provides relief on income from the use of furnished accommodation in an individual's only or main residence.
The relief is referred to in this Chapter as “rent-a-room relief”.
2
The form of relief depends on whether the individual's total rent-a-room amount exceeds the individual's limit (see sections 788 to 790).
3
If it does not, the income is not charged to income tax unless the individual elects otherwise (see sections 791 to 794).
4
If it does, the individual may elect for alternative methods of calculating the income (see sections 795 to 798).
785Person who qualifies for relief
1
An individual qualifies for rent-a-room relief for a tax year if the individual—
a
has rent-a-room receipts for the tax year (see section 786), and
b
does not derive any taxable income other than rent-a-room receipts from a relevant trade, letting or agreement.
2
“Taxable income” means receipts or other income in respect of which the individual is liable to income tax for the tax year.
3
A relevant trade, letting or agreement is one from which the individual derives rent-a-room receipts for the tax year.
Basic definitions
786Meaning of “rent-a-room receipts”
1
For the purposes of this Chapter an individual has rent-a-room receipts for a tax year if—
a
the receipts are in respect of the use of furnished accommodation in a residence in the United Kingdom or in respect of goods or services supplied in connection with that use,
b
they accrue to the individual during the income period for those receipts (see subsections (3) and (4)),
c
for some or all of that period the residence is the individual's only or main residence, and
d
the receipts would otherwise be brought into account in calculating the profits of a trade or UK property business or chargeable to income tax under Chapter 8 of Part 5 (income not otherwise charged).
2
Meals, cleaning and laundry are examples of goods or services supplied in connection with the use of furnished accommodation in a residence.
3
If the receipts would otherwise be brought into account in calculating the profits of a trade, the income period is the basis period for the tax year (see Chapter 15 of Part 2).
4
Otherwise the income period is the period which—
a
begins at the beginning of the tax year or, if later, the beginning of the letting in respect of which the receipts arise, and
b
ends at the end of the tax year or, if earlier, the end of that letting.
F595
Subsections (6) and (7) apply if—
a
the receipts would otherwise be brought into account in calculating the profits of a trade, and
b
an election under section 25A (cash basis for small businesses) has effect in relation to the trade.
6
Any amounts brought into account under section 96A (capital receipts) as a receipt in calculating the profits of the trade are to be treated as receipts within paragraph (a) of subsection (1) above.
7
The reference in subsection (1)(b) to receipts that accrue to an individual during the income period for those receipts is to be read as a reference to receipts that are received by the individual during that period.
787Meaning of “residence”
1
In this Chapter “residence” means—
a
a building, or part of a building, occupied or intended to be occupied as a separate residence, or
b
a caravan or houseboat.
2
If a building, or part of a building, designed for permanent use as a single residence is temporarily divided into two or more separate residences, it is still treated as a single residence.
788Meaning of “total rent-a-room amount”
1
For the purposes of this Chapter an individual's “total rent-a-room amount” for a tax year is the total of—
a
the individual's rent-a-room receipts for the tax year, and
b
any relevant balancing charges for the tax year (see section 802).
2
In calculating the total rent-a-room amount, no deduction is allowed for expenses or any other matter.
Individual's limit
789The individual's limit
1
For the purposes of this Chapter an individual's limit for a tax year depends on whether the individual meets the exclusive receipts condition for the tax year (see section 790).
2
If the individual does, the individual's limit for the tax year is the basic amount for the tax year.
3
If the individual does not, the individual's limit for the tax year is half that amount.
4
The basic amount for a tax year is £4250.
5
The Treasury may by order amend the sum for the time being specified in subsection (4).
790Exclusive receipts condition
1
An individual meets the exclusive receipts condition for a tax year if, for each rent-a-room residence of the individual, no receipts accrue to any other person during any relevant period in respect of—
a
the use of residential accommodation (whether furnished or not) in the residence, or
b
goods or services supplied in connection with that use (such as meals, cleaning or laundry),
at a time when the residence is the individual's only or main residence.
2
Each of the following periods is a relevant period—
a
any income period specified in section 786 for any rent-a-room receipts of the individual for the tax year,
b
the period of 12 months which begins at the same time as any such income period begins, and
c
the period of 12 months which ends at the same time as any such income period ends.
3
A “rent-a-room residence of the individual” means a residence in respect of which the individual derives rent-a-room receipts for the tax year.
Relief if amount does not exceed limit
791Full rent-a-room relief: introduction
Sections 792 to 794 (which give the full form of rent-a-room relief) apply if—
a
an individual qualifies for rent-a-room relief for a tax year,
b
the individual's total rent-a-room amount for the tax year does not exceed the individual's limit for the tax year, and
c
no election by the individual under section 799 has effect to disapply the full relief for the tax year.
792Full rent-a-room relief: trading income
1
This section applies if the individual has any rent-a-room receipts for the tax year which would otherwise be brought into account in calculating the profits of a trade.
2
The profits or losses of the trade for the tax year are treated as nil.
793Full rent-a-room relief: property income
1
This section applies if the individual has any rent-a-room receipts for the tax year which would otherwise be brought into account in calculating the profits of a UK property business.
2
In calculating those profits—
a
those receipts for the tax year, and
b
any expenses associated with them,
are not brought into account.
3
No relevant balancing charge or relevant allowance (see section 802) is made in calculating those profits for the tax year.
794Full rent-a-room relief: income chargeable under Chapter 8 of Part 5
1
This section applies if the individual has any rent-a-room receipts for the tax year which would otherwise be chargeable to income tax under Chapter 8 of Part 5 (income not otherwise charged).
2
For each agreement from which those receipts arise, the amount of—
a
those receipts arising in the tax year from the agreement, less
b
any expenses associated with them,
is treated as nil.
Alternative calculation of profits if amount exceeds limit
795Alternative calculation of profits: introduction
Sections 796 to 798 (which provide for alternative methods of calculating profits) apply if—
a
an individual qualifies for rent-a-room relief for a tax year,
b
the individual's total rent-a-room amount for the tax year exceeds the individual's limit for the tax year, and
c
an election by the individual under section 800 has effect to apply the alternative method of calculating profits for the tax year.
796Alternative calculation of profits: trading income
1
This section applies if the individual has any rent-a-room receipts for the tax year which are the receipts of a trade.
2
The profits of the trade for the tax year are—
a
the sum of the amount of the rent-a-room receipts for the tax year arising from the trade and the amount of any relevant balancing charge, less
b
the deductible amount.
3
The deductible amount—
a
is L if all the individual's rent-a-room receipts for the tax year arise from the trade, and
b
otherwise, is—
but, in either case, subject to a maximum of T.
4
In subsection (3)—
L is the individual's limit for the tax year,
T is the individual's rent-a-room receipts for the tax year arising from the trade, and
R is all the individual's rent-a-room receipts for the tax year.
5
In calculating the amount of any rent-a-room receipts for the purposes of this section, no deduction is allowed for expenses or any other matter.
797Alternative calculation of profits: property income
1
This section applies if the individual has any rent-a-room receipts for the tax year (“Part 3 rent-a-room receipts”) which are to be brought into account in calculating the profits of a UK property business.
2
In calculating those profits for the tax year—
a
the Part 3 rent-a-room receipts for the tax year are brought into account only in calculating the profits of the business for the tax year, and
b
any expenses associated with those receipts are not brought into account.
3
In calculating those profits for the tax year—
a
a deduction is allowed, and
b
no relevant allowance, but any relevant balancing charge, is made.
4
The amount of the deduction—
a
is L if all the individual's rent-a-room receipts for the tax year are Part 3 rent-a-room receipts, and
b
otherwise, is—
but, in either case, subject to a maximum of P.
5
In subsection (4)—
L is the individual's limit for the tax year,
P is the individual's Part 3 rent-a-room receipts for the tax year, and
R is all the individual's rent-a-room receipts for the tax year.
798Alternative calculation of profits: income chargeable under Chapter 8 of Part 5
1
This section applies if the individual has any rent-a-room receipts for the tax year which are chargeable to income tax under Chapter 8 of Part 5 (income not otherwise charged).
2
The amount charged for the tax year arising from all the agreements from which the receipts are derived is—
a
the amount of the receipts for the tax year so arising, less
b
the deductible amount.
3
The deductible amount is—
subject to a maximum of I.
4
In subsection (3)—
L is the individual's limit for the tax year,
I is the amount of the receipts for the tax year arising from the agreements, and
R is all the individual's rent-a-room receipts for the tax year.
5
In calculating the amount of any rent-a-room receipts for the purposes of this section, no deduction is allowed for expenses or any other matter.
Elections
799Election not to apply full relief
1
An individual may elect for sections 792 to 794 (full relief) not to apply.
2
The election—
a
must specify the tax year for which it is made, and
b
has effect for that year (unless withdrawn by notice given by the individual).
3
An election or notice of withdrawal must be made or given to the Inland Revenue on or before—
a
the first anniversary of the normal self-assessment filing date for the tax year for which the election is made, or
b
such later date as the Inland Revenue may, in a particular case, allow.
800Election for alternative methodof calculating profits
1
An individual may elect for the alternative method of calculating profits given in sections 796 to 798 to apply if—
a
the individual qualifies for rent-a-room relief for a tax year, and
b
the individual's total rent-a-room amount for the tax year exceeds the individual's limit for the tax year.
2
The election—
a
must specify the tax year for which it is made, and
b
has effect for that year and subsequent tax years (unless withdrawn by notice given by the individual).
3
A notice of withdrawal of an election must specify the tax year for which it is given.
The election ceases to have effect for that tax year and subsequent tax years.
4
Withdrawal of an election does not prevent a fresh election from being made for a subsequent tax year.
5
An election or notice of withdrawal must be made or given to the Inland Revenue on or before—
a
the first anniversary of the normal self-assessment filing date for the tax year specified in the election or notice of withdrawal, or
b
such later date as the Inland Revenue may, in a particular case, allow.
6
If—
a
an election would otherwise have effect for a tax year, but
b
the individual's total rent-a-room amount for the tax year does not exceed the individual's limit for the tax year,
the individual is treated as giving a notice of withdrawal of the election which specifies that tax year as the one for which it is given (and the election, therefore, ceases to have effect for that tax year and subsequent tax years).
801Time limit on adjustment of assessment
1
This section applies if it is necessary to make an adjustment by way of assessment to give effect to an election or notice of withdrawal under section 799 or 800.
2
The assessment is not out of time if it is made on or before the first anniversary of the normal self-assessment filing date for the tax year for which the election was made or notice was given (or treated as given).
Interpretation
802Minor definitions
In this Chapter—
“letting” includes a licence to occupy,
“relevant allowance”, for a tax year, means a capital allowance falling to be made for the tax year under Part 2 of CAA 2001 in respect of plant or machinery provided for the purposes of a trade or letting from which rent-a-room receipts are derived, and
“relevant balancing charge”, for a tax year, means a balancing charge falling to be made for the tax year under Part 2 of CAA 2001 in respect of plant or machinery provided for the purposes of a trade or letting from which rent-a-room receipts are derived.
Chapter 2F2qualifying care relief
Pt. 7 Ch. 2 heading substituted (16.12.2010) (with effect in accordance with Sch. 1 para. 36 of the amending Act) by Finance (No. 3) Act 2010 (c. 33), Sch. 1 para. 29 (with Sch. 1 para. 37)
Introduction
803Overview of Chapter 2
F91
This Chapter provides relief on income from the provision by an individual of qualifying care.
The relief is referred to in this Chapter as “qualifying care relief”.
2
The form of relief depends on whether the individual's total F10qualifying care receipts exceed the individual's limit (see sections 807 to 811).
3
If they do not, the income is not charged to income tax (see sections 812 to 814).
4
If they do, the individual may elect for an alternative method of calculating the income (see sections 815 to 819).
5
If the F11qualifying care receipts are the receipts of a trade, special rules apply —
a
if the period of account of the trade does not end on 5th April (see sections 820 to 823), and
b
in relation to capital allowances (see sections 824 to 827).
6
The provisions of this Chapter which are expressed to apply in relation to trades also apply in relation to professions and vocations.
804Person who qualifies for relief
F121
An individual qualifies for qualifying care relief for a tax year if the individual—
a
has qualifying care receipts for the tax year (see section 805), and
b
does not derive any taxable income, other than qualifying care receipts, from a relevant trade or arrangement.
2
“Taxable income” means receipts or other income in respect of which the individual is liable to income tax for the tax year.
3
A relevant trade or arrangement is one from which the individual derives F13qualifying care receipts for the tax year.
F144
Subsection (1) is subject to section 804A.
804AF31Shared lives care: further condition for relief
1
This section applies if an individual (“N”) has qualifying care receipts for a tax year in respect of the provision of shared lives care.
2
N does not qualify for qualifying care relief in respect of those receipts if the placement cap is exceeded for the residence (or any of the residences) used by N to provide the care from which those receipts are derived.
3
The placement cap is exceeded for a residence if, at any given time during the relevant period, shared lives care is being provided there (whether by N or anyone else) for more than 3 people in total.
4
The relevant period, in relation to a residence, is the period for which the residence is N's only or main residence during the income period for the receipts (see section 805).
5
If the placement cap is so exceeded but N also has qualifying care receipts for the tax year in respect of the provision of foster care, this Chapter is to apply to N for the tax year as if—
a
references to qualifying care were to foster care, and
b
accordingly, references (other than in this section) to qualifying care receipts did not include receipts in respect of the provision of shared lives care.
6
In determining the number of people for whom shared lives care is being provided at any given time, brothers and sisters (including half-brothers and half-sisters) count as one person.
Basic definitions
805Meaning of “F3qualifying care receipts”
1
For the purposes of this Chapter an individual has F15qualifying care receipts for a tax year if —
a
the receipts are in respect of the provision of F16qualifying care,
b
they accrue to the individual during the income period for those receipts (see subsections (2) and (3)), and
c
the receipts would otherwise be brought into account in calculating the profits of a trade or chargeable to income tax under Chapter 8 of Part 5 (income not otherwise charged).
2
If the receipts would otherwise be brought into account in calculating the profits of a trade, the income period is the basis period for the tax year (see Chapter 15 of Part 2).
3
Otherwise the income period is the tax year.
F604
Subsections (5) and (6) apply if—
a
the receipts would otherwise be brought into account in calculating the profits of a trade, and
b
an election under section 25A (cash basis for small businesses) has effect in relation to the trade.
5
Any amounts brought into account under section 96A (capital receipts) as a receipt in calculating the profits of the trade are to be treated as receipts within paragraph (a) of subsection (1) above.
6
The reference in subsection (1)(b) to receipts that accrue to an individual during the income period for those receipts is to be read as a reference to receipts that are received by the individual during that period.
805AF49Meaning of providing qualifying care
For the purposes of this Chapter qualifying care is provided if an individual (alone or in partnership) provides—
a
foster care but not shared lives care,
b
shared lives care but not foster care, or
c
both foster care and shared lives care.
806Meaning of providing foster care
1
For the purposes of this Chapter foster care is provided if an individual—
a
provides accommodation and maintenance for a child, and
b
does so as a foster carer.
F562
An individual is a foster carer if the child is placed with the individual by virtue of a compulsory supervision order or interim compulsory supervision order, or under any of the following enactments, unless the individual is excluded by subsection (5).
3
The enactments are—
a
section F5222C or 59(1)(a) of the Children Act 1989 (c. 41) (provision of accommodation for children by local authorities or voluntary organisations),
b
regulations under section 5 of the Social Work (Scotland) Act 1968 (c. 49),
F57c
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
d
Article 27(2)(a) or 75(1)(a) of the Children (Northern Ireland) Order 1995 (S.I. 1995/755 (N.I. 2)) (provision of accommodation for children by authorities or voluntary organisations).
F584
An individual is also a foster carer if the individual is approved as a foster carer by a local authority or a voluntary organisation in accordance with regulations under section 5 of the Social Work (Scotland) Act 1968, and the child in respect of whom the accommodation is provided—
a
is being looked after by a local authority within the meaning of section 17(6) of the Children (Scotland) Act 1995, or
b
is subject to an order or warrant made by the children’s hearing or sheriff under the Children’s Hearings (Scotland) Act 2011,
unless the individual is excluded by subsection (5).
5
The following are excluded individuals—
a
a parent of the child,
b
an individual who is not a parent of the child but who has parental responsibility (or, in Scotland, parental responsibilities) in relation to the child,
c
if the child is in care and there was a residence order in force with respect to the child immediately before the care order was made, an individual in whose favour the residence order was made, F53and
d
(in Scotland) if the child is in care and there was a residence order or contact order in force with respect to the child immediately before the child was placed in care, an individual in whose favour the residence order or contact order was made.F54; and
e
an individual with whom the child is placed under a placement falling within section 22C(6)(d) of the Children Act 1989.
F556
In this section—
“compulsory supervision order” has the meaning given by section 83 of the Children’s Hearings (Scotland) Act 2011; and
“interim compulsory supervision order” has the meaning given by section 86 of that Act.
806AF50Meaning of providing shared lives care
1
For the purposes of this Chapter shared lives care is provided by an individual if—
a
the individual provides accommodation and care for an adult or child (“X”) who has been placed with the individual, and
b
the conditions in subsection (2) are met.
2
The conditions are—
a
the accommodation is in the individual's own home,
b
the accommodation and care are provided on the basis that X will share the individual's home and daily family life during the placement,
c
the placement is made under a specified social care scheme,
d
the individual does not provide the accommodation and care as a foster carer, and
e
the individual is not excluded within the meaning of section 806(5).
3
Section 806(5) has effect for the purposes of subsection (2)(e) as if references to the child were to X (whatever X's age).
4
“Specified social care scheme” means a social care scheme of a kind specified or described in an order made by the Treasury.
5
An order under subsection (4) may make provision having effect in relation to the tax year current on the day on which the order is made.
6
In this section—
“care” means personal care, including assistance and support;
“home” means an individual's only or main residence;
“social care scheme” means a scheme, service or arrangement for those who, by reason of age, illness, disability or other vulnerability, are in need of care.
806BF50Meaning of “residence”
1
In this Chapter “residence” means—
a
a building, or part of a building, occupied or intended to be occupied as a separate residence, or
b
a caravan or houseboat.
2
If a building, or part of a building, designed for permanent use as a single residence is temporarily divided into two or more separate residences, it is still treated as a single residence.
807Calculation of “total F4qualifying care receipts”
For the purposes of this Chapter, in calculating an individual's “total F17qualifying care receipts” for a tax year, no deduction is allowed for expenses or any other matter.
Individual's limit
808The individual's limit
1
For the purposes of this Chapter an individual's limit for a tax year is the total of—
a
the fixed amount for the tax year or, if section 809 or 810 applies, the individual's share of that amount, and
b
each amount per F18adult or child for the individual for the tax year (see section 811).
2
For the purposes of this Chapter the fixed amount for a tax year is £10,000.
3
The Treasury may by order amend the sum for the time being specified in subsection (2).
809F19Share of fixed amount: residence used by more than one carer
1
This section applies if in a tax year—
a
the residence used to provide the qualifying care from which an individual's qualifying care receipts for the tax year are derived is also used by another individual to provide qualifying care, and
b
the other individual also has qualifying care receipts for the tax year.
2
Each individual's share of the fixed amount for the tax year is the fixed amount divided by the total number of individuals who—
a
use the residence in the tax year to provide qualifying care, and
b
have qualifying care receipts for the tax year.
810Share of fixed amount: income period not a year
1
This section applies if in a tax year an individual's income period for the individual's F20qualifying care receipts is a period other than a year.
2
The individual's share of the fixed amount for the tax year is—
where—
AS is the fixed amount or (if section 809 applies) the individual's share of the fixed amount, and
D is the number of days in the individual's income period.
811The amount per F5adult or child
F211
An individual's amount per adult or child for a tax year is found by multiplying—
a
the number of weeks during the income period for the tax year in which the individual provides qualifying care for the adult or child, by
b
the weekly amount for the adult or child.
1A
The weekly amount for an adult is £250.
2
The weekly amount for a child is—
a
£200 for a week throughout which the child is under 11 years old, and
b
£250 for other weeks.
3
The Treasury may by order amend any amount for the time being specified in F22subsection (1A) or (2).
4
If an individual provides F23qualifying care for an adult or child during an income period for only part of a week, the part is treated as a whole week.
5
If an income period begins or ends during a week, the week is treated as falling within the income period ending during the week.
But if there is no such income period, the week is treated as falling within the income period beginning during the week.
6
A week is a period of 7 days beginning with a Monday.
Relief if amount does not exceed limit
812F24Full qualifying care relief: introduction
Sections 813 and 814 (which give the full form of qualifying care relief) apply if—
a
an individual qualifies for qualifying care relief for a tax year,
b
the individual's total qualifying care receipts for the tax year do not exceed the individual's limit for the tax year, and
c
sections 822 and 823 do not apply (accounting date for trade not 5 April).
813Full F6qualifying care relief: trading income
1
This section applies if the individual's F25qualifying care receipts for the tax year would otherwise be brought into account in calculating the profits of a trade.
2
The profits or losses of the trade for the tax year are treated as nil.
814Full F7qualifying care relief: income chargeable under Chapter 8 of Part 5
1
This section applies if the individual's F26qualifying care receipts for the tax year would otherwise be chargeable to income tax under Chapter 8 of Part 5 (income not otherwise charged).
2
For each arrangement from which those receipts arise, the amount of—
a
those receipts arising in the tax year from the arrangement, less
b
any expenses associated with them,
is treated as nil.
Alternative calculation of profits if amount exceeds limit
815Alternative calculation of profits: introduction
Sections 816 and 817 (which provide for an alternative method of calculating profits) apply if—
a
an individual qualifies for F27qualifying care relief for a tax year,
b
the individual's total F28qualifying care receipts for the tax year exceed the individual's limit for the tax year,
c
sections 822 and 823 do not apply (accounting date for trade not 5th April), and
d
an election by the individual has effect to apply the alternative method of calculating profits for the tax year (see sections 818 and 819).
816Alternative calculation of profits: trading income
1
This section applies if the individual's F29qualifying care receipts for the tax year are the receipts of a trade.
2
The profits of the trade for the tax year are—
a
the individual's total F30qualifying care receipts for the tax year, less
b
the individual's limit for the tax year.
817Alternative calculation of profits: income chargeable under Chapter 8 of Part 5
1
This section applies if the individual has F32qualifying care receipts for the tax year which are chargeable to income tax under Chapter 8 of Part 5 (income not otherwise charged).
2
The amount charged for the tax year arising from all the arrangements from which the receipts are derived is—
a
the individual's total F33qualifying care receipts for the tax year, less
b
the individual's limit for the year.
818Election for alternative methodof calculating profits
1
An individual may elect for the alternative method of calculating profits given in sections 816 and 817 to apply if—
a
the individual qualifies for F34qualifying care relief for a tax year,
b
the individual's total F35qualifying care receipts for the tax year exceed the individual's limit for the tax year, and
c
sections 822 and 823 do not apply (accounting date for trade not 5th April).
2
An election under this section—
a
must specify the tax year for which it is made, and
b
has effect for that year (unless withdrawn by notice given by the individual).
3
An election or notice of withdrawal under this section must be made or given to the Inland Revenue on or before—
a
the first anniversary of the normal self-assessment filing date for the tax year for which the election is made, or
b
such later date as the Inland Revenue may, in a particular case, allow.
819Adjustment of assessment
1
This section applies if—
a
an individual does not make an election under section 818 for a tax year on or before the date for making the election, and
b
an adjustment is made after that date to the profits from the individual's provision of F36qualifying care on which the individual is liable to tax for the tax year.
2
The individual may make an election under this section to apply the alternative method of calculating profits given in sections 816 and 817 for the tax year.
3
The election—
a
must specify that tax year, and
b
has effect for that tax year (unless withdrawn by notice given by the individual).
4
An election or notice of withdrawal under this section must be made or given to the Inland Revenue on or before—
a
the first anniversary of the normal self-assessment filing date for the tax year in which the adjustment is made, or
b
such later date as the Inland Revenue may, in a particular case, allow.
Periods of account not ending on 5th April
820Periods of account not ending on 5th April
F611
Sections 822 and 823 (which deal with the period of account of a trade not ending on 5th April) apply if—
a
an individual qualifies for F37qualifying care relief for a tax year,
b
the individual's F38qualifying care receipts for the tax year are the receipts of a trade, and
c
the period of account in which those receipts accrue does not end on 5th April in the tax year.
F622
Where an election under section 25A (cash basis for small businesses) has effect in relation to the trade, any reference in this section or sections 821 to 823 to the period of account in which receipts accrue is to be read as a reference to the period of account in which receipts are received.
821Meaning of “relevant limit”
1
For the purposes of sections 822 and 823 the “relevant limit” for a period of account in which the individual's F39qualifying care receipts accrue is found by adding—
a
the fixed amount for the tax year in which that period ends or (as the case may be) the individual's share of the fixed amount for that year (found in accordance with sections 808 to 810), and
b
for each of the tax years in which the period of account falls, each amount per F40adult or child for the individual for each part of the period of account falling in that tax year.
2
822Full relief
1
This section applies if the individual's total F42qualifying care receipts for the period of account do not exceed the individual's relevant limit for the period.
2
The profits or losses of the trade for the tax year are treated as nil.
823Alternative method of calculating profits
1
This section applies if—
a
the individual's total F43qualifying care receipts for the period of account exceed the individual's relevant limit for the period, and
b
the individual makes an election under this section.
2
The profits of the trade for the tax year are—
a
the individual's total F44qualifying care receipts for the period of account, less
b
the individual's relevant limit for the period.
3
Sections 818(2) and (3) and 819 (adjustment of assessment) apply for the purposes of an election under this section as they apply for the purposes of an election under those sections.
Capital allowances for foster carers carrying on trade
C1824Capital allowances: introduction
1
In this group of sections (that is, this section and sections 825 to 827) an individual is a “relevant individual” if in a tax year—
a
the full F45qualifying care relief in section 813 or 822 (trading income), or
b
the alternative method of calculating profits under section 816 or 823 (trading income),
applies to the individual for the tax year.
2
In this group of sections a period is a “relevant chargeable period” of a relevant individual if—
a
it is a chargeable period of the individual, and
b
it corresponds to the income period for the individual's F46qualifying care receipts in the tax year for which the individual is a relevant individual.
F472A
In this group of sections, in relation to a relevant individual—
a
“the care business” means the provision of qualifying care by the individual,
b
“care business expenditure” means qualifying expenditure incurred on the provision of plant or machinery wholly or partly for the care business,
c
“care business pool” means a pool of care business expenditure (even if the balance for the time being is nil), and
d
a reference to “another activity” is to a qualifying activity carried on by the individual other than the care business.
2B
In this group of sections, plant or machinery is referred to as being “in” a pool if qualifying expenditure incurred on its provision has been allocated at any time to that pool.
3
Expressions—
a
which are used in CAA 2001 and in this group of sections, but
b
which are not otherwise defined in this Chapter,
have the same meaning in this group of sections as in CAA 2001.
825F8Unallocated capital expenditure
1
This section applies if—
a
at the beginning of a relevant chargeable period of a relevant individual, there is care business expenditure which has not been allocated to a care business pool,
b
the individual is entitled under CAA 2001 to allocate the expenditure, or a part of it, to a care business pool for that period, and
c
the previous chargeable period was not a relevant chargeable period.
2
So much of the expenditure as the individual is entitled to allocate to a care business pool for that period is to be treated for the purposes of CAA 2001 as allocated to the appropriate kind of care business pool for that period (whether or not any of it is actually so allocated).
3
For the different kinds of pool, see section 54 of CAA 2001.
825ADeemed disposal event
1
Subsection (2) applies to a care business pool for a relevant chargeable period of a relevant individual if the previous chargeable period was not a relevant chargeable period.
2
CAA 2001 is to apply as if—
a
a disposal event occurs immediately after the beginning of the relevant chargeable period in respect of plant or machinery in the pool,
b
disposal receipts fall to be brought into account in the pool for the period because of that event, and
c
the total of the receipts equals the sum of amount A and amount B (or nil if there are no such amounts).
3
Amount A is the amount of any expenditure treated as allocated to the pool for the period by virtue of section 825 (whether or not any of it is actually so allocated).
4
Amount B is the amount of any unrelieved qualifying expenditure carried forward in the pool from the previous chargeable period.
825BPlant or machinery used for care business
1
This section applies if—
a
disposal receipts fall to be brought into account in a pool for a relevant chargeable period by virtue of section 825A, and
b
on the re-start date, the relevant individual still owns any of the plant or machinery which was in that pool and is still using any of it for the purposes of the care business.
2
The re-start date is the first day of the first subsequent chargeable period which is not a relevant chargeable period.
3
A reference in this section to the retained plant or machinery is to so much of the plant or machinery in the pool as the relevant individual—
a
still owns on the re-start date, and
b
is still using on that date for the purposes of the care business.
4
The individual is to be treated under CAA 2001—
a
as having brought the retained plant or machinery into use on the re-start date for the purposes of the care business,
b
as having incurred capital expenditure on the provision of that plant or machinery for those purposes on that date, and
c
as owning that plant and machinery as a result of having incurred that expenditure.
5
The total amount of expenditure which the individual is to be treated as having incurred (for all of the retained plant or machinery) is the smaller of—
a
the total market value of the retained plant or machinery on the re-start date, and
b
an amount equal to the disposal receipts brought into account in the pool as described in subsection (1)(a).
6
If the individual is treated under section 13 of CAA 2001 as having incurred notional expenditure before the re-start date as a result of bringing plant or machinery in the pool into use for the purposes of another activity, the amount mentioned in subsection (5)(b) must be reduced by the total amount of that expenditure, as determined in accordance with section 825C(2).
7
But subsection (6) does not apply if the plant or machinery which was brought into use for the purposes of another activity is the retained plant or machinery (for example, where it was brought into use only partly for the purposes of that other activity).
8
The question whether the provision of the retained plant or machinery is to be treated as wholly or only partly for the purposes of the care business is to be determined according to whether the use referred to in subsection (3)(b) is wholly or only partly for those purposes.
825CPlant or machinery used for other qualifying activities
1
This section applies if—
a
disposal receipts fall to be brought into account in a pool by virtue of section 825A because of a disposal event, and
b
after that disposal event, the relevant individual brings any of the plant or machinery in that pool into use for the purposes of another activity.
2
Section 13 of CAA 2001 has effect as if the total amount of the notional expenditure which the individual is treated under that section as having incurred, for all of the plant or machinery in that pool which is brought into use for the purposes of the other activity, were the smaller of—
a
the total market value of that plant or machinery on the day on which it is brought into use for the purposes of that other activity, and
b
an amount equal to the disposal receipts brought into account in the pool as mentioned in subsection (1)(a).
3
Subsection (2) does not apply to plant or machinery brought into use for the purposes of another activity if—
a
the individual is treated by virtue of section 825B as having already brought that plant or machinery into use for the purposes of the care business, or
b
this section has already applied to that plant or machinery since the disposal event.
4
The amount mentioned in subsection (2)(b) must be reduced by the appropriate sum if some plant or machinery in the pool is brought into use for the purposes of another activity after —
a
the individual is treated by virtue of section 825B as having brought other plant or machinery in that pool into use for the purposes of the care business, or
b
this section has applied to other plant or machinery in that pool since the disposal event.
5
The appropriate sum is—
a
in a case within paragraph (a) of subsection (4), the total amount of expenditure which the individual is treated by virtue of section 825B as having incurred on the provision of that other plant or machinery, and
b
in a case within paragraph (b) of that subsection, the total amount of the notional expenditure (as determined in accordance with subsection (2)) which the individual is treated under section 13 of CAA 2001 as having incurred on the provision of that other plant or machinery since the disposal event.
825DSubsequent disposal events
1
This section applies to an item of plant or machinery which a relevant individual—
a
is treated by virtue of section 825B as bringing into use, or
b
brings into use in circumstances where section 825C(2) applies.
2
The date (in either case) on which the item is brought or treated as brought into such use is referred to in this section as the applicable date.
3
The first disposal event to occur in respect of the item on or after the applicable date is to be regarded for the purposes of section 60(3) of CAA 2001 as the first such event.
4
That event requires a disposal value to be brought into account regardless of anything to the contrary in section 64(1) of that Act.
5
But a reference in section 62 of that Act to the amount of qualifying expenditure incurred by the individual on the provision of that item is a reference to the amount of qualifying expenditure originally incurred by the individual on its provision (and not to any proportion of the total amount treated by virtue of section 825B or 825C as having been incurred).
C1826Excluded capital expenditure
Capital expenditure (“excluded capital expenditure”) does not constitute qualifying expenditure for the purposes of CAA 2001 if it is—
a
incurred by a relevant individual in a relevant chargeable period, and
b
incurred on the provision of plant or machinery wholly or partly for the provision of F48qualifying care by the individual.
C1827Excluded capital expenditure: subsequent treatment of asset
If a relevant individual incurs excluded capital expenditure in a relevant chargeable period, section 13 of CAA 2001 applies as if, on the first day of the first subsequent chargeable period which is not a relevant chargeable period—
a
the individual brings into use for the provision of F51qualifying care such of the plant or machinery on which the expenditure was incurred as the individual still owns on that day, and
b
the individual owns the plant or machinery as a result of incurring capital expenditure on its provision for other purposes.
Overlap profit
828Overlap profit
1
This section applies if the profits or losses of a trade for a tax year are calculated in accordance with section 813, 816, 822 or 823.
2
Nothing in this Chapter is to be read—
a
as preventing a deduction for overlap profit under section 205 or 220 in calculating the profits or losses of the trade for the tax year, or
b
as preventing overlap profit from arising by reference to profits of the trade calculated for the tax year in accordance with section 816 or 823 (alternative calculation of profits).
3
“Overlap profit” has the same meaning in this section as it has in Chapter 15 of Part 2 (see section 204).
Words in Pt. 7 heading substituted (16.12.2010) (with effect in accordance with Sch. 1 para. 36 of the amending Act) by Finance (No. 3) Act 2010 (c. 33), Sch. 1 para. 34 (with Sch. 1 para. 37)