Finance Bill

House of Commons

Session 2002 - 03
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Finance Bill

Finance Bill
Schedule 36 — Foster carers
Part 1 — Introduction
    406

          (5)      In this Schedule, “foster care arrangement” means an arrangement by which
an individual provides foster care otherwise than as part of a trade,
profession or vocation carried on by that individual.
Meaning of “foster care receipts”
  3       (1)      For the purposes of this Schedule, receipts are “foster care receipts” of an
5
individual for a year of assessment if—
              (a)             they are receipts in respect of the provision of foster care,
              (b)             apart from this Schedule, they would be chargeable—
                    (i)                   under Case I or II of Schedule D as the profits of a trade,
profession or vocation, or
10
                    (ii)                  under Case VI of Schedule D as the profits of one or more
foster care arrangements, and
              (c)             they accrue to the individual during the income period for those
receipts specified below.
          (2)      In the case of receipts which would, apart from this Schedule, be chargeable
15
under Case I or II of Schedule D as the profits of a trade, profession or
vocation, the income period for those receipts is the basis period of the trade,
profession or vocation for the year of assessment (see sections 60 to 63 of the
Taxes Act 1988).
          (3)      In the case of receipts which would, apart from this Schedule, be chargeable
20
under Case VI of Schedule D as the profits of one or more foster care
arrangements, the income period for those receipts is the year of assessment.
Meaning of “provision of foster care”
  4       (1)      In this Schedule, the “provision of foster care” means the provision of
accommodation and maintenance for a child by an individual who—
25
              (a)             is a person falling within any of sub-paragraphs (2) to (4), and
              (b)             is not a person who is excluded by sub-paragraph (5).
          (2)      A person falls within this sub-paragraph if he is a person with whom the
child has been placed under—
              (a)             section 23(2)(a) of the Children Act 1989 (c. 41) (provision of
30
accommodation and maintenance for children by local authorities),
or
              (b)             section 59(1)(a) of that Act (provision of accommodation for children
by voluntary organisations).
          (3)      A person falls within this sub-paragraph if—
35
              (a)             he is a person who 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 (c. 49) (as at 9th April
2003, see regulation 7 of the Fostering of Children (Scotland)
Regulations 1996 (S.I. 1996/3263)) and is providing accommodation
40
for the child who is being “looked after” by a local authority within
the meaning of section 17(6) of the Children (Scotland) Act 1995
(c. 36), or
              (b)             he is a person with whom the child has been placed—
                    (i)                   under regulations under section 5 of the Social Work
45
(Scotland) Act 1968 (as at 9th April 2003, see regulations 14

Finance Bill
Schedule 36 — Foster carers
Part 1 — Introduction
    407

and 16 of the Fostering of Children (Scotland) Regulations
1996), or
                    (ii)                  pursuant to a supervision requirement under section 70 of
the Children (Scotland) Act 1995.
          (4)      A person falls within this sub-paragraph if he is a person with whom the
5
child has been placed under—
              (a)             Article 27(2)(a) of the Children (Northern Ireland) Order 1995 (S.I.
1995/755 (N.I. 2)) (provision of accommodation and maintenance for
children by authorities), or
              (b)             Article 75(1)(a) of that Order (provision of accommodation for
10
children by voluntary organisations).
          (5)      The persons who are excluded are—
              (a)             a parent of the child;
              (b)             a person who is not a parent of the child but who has parental
responsibility, or (in Scotland) parental responsibilities, in relation to
15
the child;
              (c)             where the child is in care and there was a residence order in force
with respect to him immediately before the care order was made, a
person in whose favour the residence order was made;
              (d)             in Scotland, where the child is in care and there was a residence order
20
or a contact order in force with respect to him immediately before he
was placed in care, a person in whose favour the residence order or
contact order was made.
Meaning of “total foster care receipts”
  5       (1)      For the purposes of this Schedule, an individual’s “total foster care receipts”
25
for a year of assessment or (as the case may be) a period of account are all of
the individual’s foster care receipts for that year or period.
          (2)      In calculating an individual’s total foster care receipts, no deduction is
allowed for any expenses or any other matter.
The individual’s limit
30
  6        The individual’s limit for a year of assessment is the total of—
              (a)             the individual’s share of the fixed amount for that year (see
paragraph 7), and
              (b)             each amount per child for that individual for that year (see
paragraph 8).
35
The individual’s share of the fixed amount
  7       (1)      The fixed amount is £10,000.
          (2)      If, in a year of assessment, no adjustment falls to be made in the case of an
individual—
              (a)             under sub-paragraph (3), or
40
              (b)             under sub-paragraph (4),
                   the individual’s share of the fixed amount for that year is the fixed amount.
          (3)      If, in a year of assessment,—

Finance Bill
Schedule 36 — Foster carers
Part 1 — Introduction
    408

              (a)             the residence used to provide the foster care from which an
individual’s foster care receipts for that year are derived is also used
by one or more other individuals for the provision of foster care, and
              (b)             that other individual, or those other individuals, also have foster care
receipts for that year,
5
                   each individual’s share of the fixed amount for that year is that amount
divided by the total number of individuals who use the residence in that
year for the provision of foster care and have foster care receipts for that
year.
                   This sub-paragraph is subject to sub-paragraph (4).
10
          (4)      If, in a year of assessment, the individual’s income period for his foster care
receipts is a period other than a year, the individual’s share of the fixed
amount for that year of assessment is found by multiplying the amount that
would be his share (apart from this sub-paragraph) by—
                   where D is the number of days in the individual’s income period.
15
          (5)      In this paragraph “residence” means—
              (a)             a building, or part of a building, which is occupied or intended to be
occupied as a separate residence, or
              (b)             a caravan or houseboat.
          (6)      If a building or part of a building is designed for permanent use as a single
20
residence, but is temporarily divided into two or more separate residences,
it is still treated as a single residence.
The amount per child
  8       (1)      An individual’s amount per child for a year of assessment is found by
multiplying—
25
              (a)             the number of weeks during the income period for that year in which
the individual provides foster care for that child, by
              (b)             the weekly amount for that child.
          (2)      The weekly amount for a child is—
              (a)             £200 for a week throughout which the child is under 11 years old,
30
and
              (b)             £250 for a week—
                    (i)                   in which the child reaches the age of 11, or
                    (ii)                  throughout which the child is 11 years old or over.
          (3)      Where in the case of any week an individual provides foster care for a child
35
during an income period for part only of the week, that part of a week counts
as a whole week for the purposes of this paragraph.
          (4)      Where an income period begins or ends during a week, that week is to be
counted for the purposes of this paragraph as falling within the income
period which ends during the week (unless there is no such income period,
40
in which case it falls within the income period which begins during the
week).

Finance Bill
Schedule 36 — Foster carers
Part 2 — The exemption and the alternative methods of calculation
    409

          (5)      In this paragraph “week” means any period of seven days beginning with a
Monday.
Power to alter amounts
  9        The Treasury may by order amend the amounts for the time being specified
in paragraph 7(1) and 8(2).
5
Part 2
The exemption and the alternative methods of calculation
The exemption
  10      (1)      This paragraph applies to an individual for a year of assessment for which—
              (a)             the individual qualifies for relief under this Schedule,
10
              (b)             his total foster care receipts do not exceed his limit, and
              (c)             paragraph 15 (cases where accounting date for trade, profession or
vocation is other than 5th April) does not apply.
          (2)      If the individual’s foster care receipts for the year of assessment are the
receipts of a trade, profession or vocation, the profits or losses from that
15
trade, profession or vocation for the year are to be treated as nil.
          (3)      If, in a case falling within sub-paragraph (2), the individual would, apart
from that sub-paragraph, be entitled to a deduction for the year under
section 63A(1) or (3) of the Taxes Act 1988 (overlap profits and overlap
losses), the individual is entitled to that deduction notwithstanding that sub-
20
paragraph.
          (4)      Sub-paragraph (5) applies if the individual’s foster care receipts for the year
of assessment are receipts from one or more foster care arrangements.
          (5)      For each foster care arrangement from which those receipts arise, the
amount of—
25
              (a)             the receipts arising in the year of assessment from the arrangement,
less
              (b)             any expenses associated with those receipts,
           is to be treated as nil.
Alternative calculation of profits where amount is above the limit
30
  11       The alternative method of calculating profits given in paragraphs 12 and 13
applies to an individual for a year of assessment for which—
              (a)             the individual qualifies for relief under this Schedule,
              (b)             his total foster care receipts exceed his limit,
              (c)             paragraph 15 (cases where accounting date for trade, profession or
35
vocation is other than 5th April) does not apply, and
              (d)             an election by him under paragraph 14 has effect.
Alternative calculation of profits: income from trade, etc
  12      (1)      This paragraph applies if—
              (a)             the alternative method of calculating profits applies to an individual
40
for a year of assessment, and

Finance Bill
Schedule 36 — Foster carers
Part 2 — The exemption and the alternative methods of calculation
    410

              (b)             his foster care receipts for the year are the receipts of a trade,
profession or vocation.
          (2)      The profits of the year of assessment of the trade, profession or vocation
from which the individual’s foster care receipts arise are—
              (a)             the amount of the foster care receipts for the year arising from the
5
trade, profession or vocation, less
              (b)             the individual’s limit for the year.
Alternative calculation of profits: income charged under Case VI of Schedule D
  13      (1)      This paragraph applies if—
              (a)             the alternative method of calculating profits applies to an individual
10
for a year of assessment, and
              (b)             his foster care receipts for the year are receipts from one or more
foster care arrangements.
          (2)      The amount of the profits of the year of assessment from all of the foster care
arrangements from which the individual’s foster care receipts arise is—
15
              (a)             the sum of the foster care receipts for the year from each foster care
arrangement from which those receipts arise, less
              (b)             the individual’s limit for the year.
Election for alternative method
  14      (1)      An individual may elect—
20
              (a)             for the alternative method of calculating profits given in paragraph
12 or 13 to apply if the conditions specified in paragraph 11(a), (b)
and (c) are met, and
              (b)             for the alternative method of calculating profits given in sub-
paragraph (5) of paragraph 15 to apply if the conditions specified in
25
paragraphs (a) and (b) of sub-paragraph (4) of that paragraph are
met.
          (2)      An election under this paragraph has effect for the year of assessment for
which it is made.
          (3)      Subject to sub-paragraphs (5) and (6), an election under this paragraph must
30
be made on or before the election deadline for the year of assessment to
which it relates.
          (4)      The election deadline for a year of assessment is—
              (a)             the first anniversary of the 31st January next following that year of
assessment, or
35
              (b)             such later date as the Board may in any particular case allow.
          (5)      If—
              (a)             an individual does not make an election under this paragraph for a
year of assessment on or before the election deadline for that year,
and
40
              (b)             an adjustment is made after that deadline to the profits from his
provision of foster care on which he is chargeable to tax for that year,
                   the individual may make an election under this paragraph for the year on or
before the date specified in sub-paragraph (6).
          (6)      That date is—
45

Finance Bill
Schedule 36 — Foster carers
Part 2 — The exemption and the alternative methods of calculation
    411

              (a)             the first anniversary of the 31st January next following the year of
assessment in which the adjustment is made, or
              (b)             such later date as the Board may in any particular case allow.
          (7)      Any election under this paragraph must be made in writing to an officer of
the Board.
5
Periods of account ending otherwise than on 5th April
  15      (1)      This paragraph applies to an individual for a year of assessment for which—
              (a)             the individual qualifies for relief under this Schedule,
              (b)             his foster care receipts are the receipts of a trade, profession or
vocation, and
10
              (c)             the period of account in which his foster care receipts accrue ends on
a day other than 5th April in that year of assessment.
          (2)      If the individual’s total foster care receipts for the period of account do not
exceed the relevant limit for that period (see sub-paragraph (6) or (8)) the
profits or losses from his trade, profession or vocation for the year of
15
assessment are to be treated as nil.
          (3)      If, in a case falling within sub-paragraph (2), the individual would, apart
from that sub-paragraph, be entitled to a deduction for the year under
section 63A(1) or (3) of the Taxes Act 1988 (overlap profits and overlap
losses), the individual is entitled to that deduction notwithstanding that sub-
20
paragraph.
          (4)      Sub-paragraph (5) applies where—
              (a)             the individual’s total foster care receipts for the period of account
exceed the relevant limit for that period, and
              (b)             an election by him under paragraph 14 has effect.
25
          (5)      The profits of the year of assessment of the trade, profession or vocation
from which the individual’s foster care receipts arise are—
              (a)             the amount of the foster care receipts arising from the trade,
profession or vocation for the period of account, less
              (b)             the relevant limit for that period.
30
          (6)      If the period of account in which the individual’s foster care receipts accrue
ends in the year 2003-04, “the relevant limit” for that period is found by
aggregating—
              (a)             the individual’s share of the fixed amount for the year 2003-04
(found in accordance with paragraph 7), and
35
              (b)             each amount per child for that individual for that period of account.
          (7)      For the purposes of sub-paragraph (6), an individual’s amount per child for
the period of account is each amount that would be his amount per child by
virtue of paragraph 8 for the year 2003-04 if that period of account were the
income period for that year.
40
          (8)      If the period of account in which the individual’s foster care receipts accrue
ends in a year subsequent to the year 2003-04, “the relevant limit” for that
period is found by aggregating—
              (a)             the individual’s share of the fixed amount for the year in which the
period of account ends (found in accordance with paragraph 7), and
45

Finance Bill
Schedule 36 — Foster carers
Part 3 — Capital allowances
    412

              (b)             for each of the years of assessment in which the period of account
falls, each amount per child for that individual for each part of that
period of account which falls within that year of assessment.
          (9)      For the purposes of sub-paragraph (8), an individual’s amount per child for
a part of a period of account is each amount that would be his amount per
5
child by virtue of paragraph 8 for the year of assessment in which the part of
that period falls if that part of the period of account were the income period
for that year.
Part 3
Capital allowances
10
Introductory
  16      (1)      Paragraphs 17 to 19 make provision for the application of the Capital
Allowances Act 2001 (c. 2) (“CAA 2001”) in relation to—
              (a)             a relevant individual, and
              (b)             a relevant chargeable period of that individual.
15
          (2)      For this purpose, a “relevant individual” is an individual who, in a year of
assessment, satisfies the conditions in sub-paragraphs (3) and (4).
          (3)      The first condition is that in the year of assessment the individual would,
apart from this Schedule, have foster care receipts chargeable—
              (a)             under Case I or II of Schedule D as the profits of a trade, profession
20
or vocation, or
              (b)             under Case VI of Schedule D as the profits of one or more foster care
arrangements.
          (4)      The second condition is that—
              (a)             the exemption in paragraph 10 or (as the case may be) 15(2) applies
25
to the individual for the year of assessment, or
              (b)             the individual has elected for the alternative method of calculating
profits in paragraph 12, 13 or (as the case may be) 15(5) to apply to
him for the year of assessment.
          (5)      A period is a “relevant chargeable period” of a relevant individual if—
30
              (a)             it is a chargeable period of the individual,
              (b)             it corresponds to an income period for the individual’s foster care
receipts in a year of assessment, and
              (c)             that year of assessment is a year in which the individual satisfies the
conditions in sub-paragraphs (3) and (4).
35
Provisions applying in relation to carried forward unrelieved qualifying expenditure
  17      (1)      This paragraph applies in any case where—
              (a)             there is any available qualifying expenditure in a relevant pool for a
relevant chargeable period of a relevant individual,
              (b)             that expenditure is unrelieved qualifying expenditure carried
40
forward in the pool from the previous chargeable period under
section 59 of CAA 2001, and
              (c)             that previous chargeable period was not a relevant chargeable
period.



© Parliamentary copyright 2003	Revised 16 April 2003