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Income Tax (Trading and Other Income) Act 2005

Type Public General Act

Publication 2005-03-24

Last updated 2026-01-20

State In force

Department Statute Law Database

Source legislation.gov.uk

articles Not indexed

Reform history JSON API

(4) A person meets the care registration requirement in relation to care provided in Northern Ireland if the person is registered in respect of the provision of care under—

(a) Part 2 or 3 of the Registered Homes (Northern Ireland) Order 1992 (S.I. 1992/3204 (N.I. 20)), or

(b) Part 3 of the Health and Personal Social Services (Quality, Improvement and Regulation) (Northern Ireland) Order 2003 (S.I. 2003/431 (N.I. 9)).

(5) A person meets the care registration requirement in relation to care provided in a territory outside the United Kingdom if the person meets requirements under the law of that territory relating to the provision of care that are comparable to those mentioned in subsections (2) to (4).

(6) The Treasury may by order amend this section.

Chapter 8 — Other annual payments

Certain annual payments by individuals

727

(1) No liability to income tax arises under Part 5 in respect of an annual payment if it—

(a) is made by an individual, and

(b) arises in the United Kingdom.

(2) Subsection (1) is subject to—

section 728 (commercial payments), and

section 729 (payments for non-taxable consideration).

(3) Subsection (1) also applies to a payment made by an individual's personal representatives if—

(a) the individual would have been liable to make it, and

(b) that subsection would have applied if the individual had made it.

(4) For the purposes of subsection (1) and section 728, “individual” includes a Scottish partnership if at least one partner is an individual.

Commercial payments

728

A payment by an individual is not exempt from income tax under section 727(1) if it is made for commercial reasons in connection with the individual's trade, profession or vocation.

Payments for non-taxable consideration

729

(1) A payment that meets condition A is only exempt from income tax under section 727(1) if condition B or C is met.

(2) Condition A is that—

(a) the payment is made under a liability incurred at any time for consideration in money or money's worth, and

(b) some or all of the consideration is not required to be brought into account in calculating the payer's income for income tax purposes.

(3) Condition B is that the payment is income within section 627(1) (payments on dissolution or separation) in the recipient's hands.

(4) Condition C is that the payment is made to an individual under a liability incurred at any time in consideration of the individual surrendering, assigning or releasing an interest in settled property to or in favour of a person with a subsequent interest.

(5) In the application of subsection (4) to Scotland, the reference to settled property is to be read as a reference to property held in trust.

Foreign maintenance payments

730

(1) No liability to income tax arises under Part 5 in respect of an annual payment if—

(a) it is a maintenance payment,

(b) it arises outside the United Kingdom, and

(c) had it arisen in the United Kingdom it would be exempt from income tax under section 727 (certain annual payments by individuals).

(2) In subsection (1) “maintenance payment” means a periodical payment which meets conditions A and B.

(3) Condition A is that the payment is made under a court order or a written or oral agreement.

(4) Condition B is that the payment is made by a person—

(a) as one of the parties to a marriage or civil partnership to, or for the benefit of, and for the maintenance of, the other party,

(b) to any person under 21 for that person's own benefit, maintenance or education, or

(5) In subsection (4) “marriage” includes a marriage that has been dissolved or annulled , and “civil partnership” includes a civil partnership that has been dissolved or annulled .

(6) Subsection (1) also applies to a payment made by an individual's personal representatives if—

(a) the individual would have been liable to make it, and

(b) that subsection would have applied if the individual had made it.

Periodical payments of personal injury damages etc.

Periodical payments of personal injury damages

731

(1) No liability to income tax arises for the persons specified in section 733 in respect of periodical payments to which subsection (2) applies or annuity payments to which subsection (3) applies.

(2) This subsection applies to periodical payments made pursuant to—

(a) an order of the court, so far as it is made in reliance on section 2 of the Damages Act 1996 (c. 48) (periodical payments) (including an order as varied),

(b) an order of a court outside the United Kingdom which is similar to an order made in reliance on that section (including an order as varied),

(c) an agreement, so far as it settles a claim or action for damages in respect of personal injury (including an agreement as varied),

(d) an agreement, so far as it relates to making payments on account of damages that may be awarded in such a claim or action (including an agreement as varied), or

(e) a Motor Insurers' Bureau undertaking in relation to a claim or action in respect of personal injury (including an undertaking as varied).

(3) This subsection applies to annuity payments made under an annuity purchased or provided—

(a) by the person by whom payments to which subsection (2) applies would otherwise fall to be made, and

(b) in accordance with such an order, agreement or undertaking as is mentioned in subsection (2) or a varying order, agreement or undertaking.

(4) In this section “damages in respect of personal injury” includes damages in respect of a person's death from personal injury.

(5) In this section “personal injury” includes disease and impairment of physical or mental condition.

(6) In this section “a Motor Insurers' Bureau undertaking” means an undertaking given by —

(a) the Motor Insurers' Bureau (being the company of that name incorporated on 14th June 1946 under the Companies Act 1929 (c. 23)), or

(b) an Article 75 insurer under the Bureau's Articles of Association.

Compensation awards

732

(1) No liability to income tax arises for the persons specified in section 733 in respect of annuity payments if they are made under an annuity purchased or provided under an award of compensation made under the Criminal Injuries Compensation Scheme or the Victims of Overseas Terrorism Compensation Scheme.

(2) The Treasury may by order provide for sections 731, 733 and 734 to apply, with such modifications as they consider necessary, to periodical payments by way of compensation for personal injury for which provision is made under a scheme or arrangement other than the Criminal Injuries Compensation Scheme or the Victims of Overseas Terrorism Compensation Scheme.

(3) In this section—

“the Criminal Injuries Compensation Scheme” means—the schemes established by arrangements made under the Criminal Injuries Compensation Act 1995 (c. 53),arrangements made by the Secretary of State for compensation for criminal injuries in operation before the commencement of those schemes, orthe scheme established under the Criminal Injuries (Northern Ireland) Order 2002 (S.I. 2002/796) (N.I.1), and

“personal injury” includes disease and impairment of physical or mental condition.

Persons entitled to exemptions for personal injury payments etc.

733

The persons entitled to the exemptions given by sections 731(1) and 732(1) for payments are—

(a) the person entitled to the damages under the order, agreement, undertaking or to the compensation under the award in question (“A”),

(b) a person who receives the payment in question on behalf of A, and

(c) a trustee who receives the payment in question on trust for the benefit of A under a trust under which A is, while alive, the only person who may benefit.

Payments from trusts for injured persons

734

(1) No liability to income tax arises for the persons specified in subsection (2) in respect of sums paid under a lifetime trust—

(a) to the person (“A”) who is entitled to—

(i) a payment under an order, agreement or undertaking within section 731(2) or an annuity purchased or provided as mentioned in section 731(3), or

(ii) compensation under an award within section 732(1), or

(b) for the benefit of A.

(2) The persons are—

(a) A, and

(b) if subsection (1)(b) applies, a person who receives the sum on behalf of A.

(3) For the purposes of subsection (1), sums are paid under a lifetime trust if they are paid—

(a) by the trustees of a trust under which A is, while alive, the only person who may benefit, and

(b) out of payments within section 731(2) or (3) or 732(1) which are received by them on trust for A.

Health and employment insurance payments

735

(1) No liability to income tax arises under this Act in respect of an annual payment under an insurance policy if—

(a) the payment is a benefit provided under so much of the policy as insures against a health or employment risk (see section 736),

(b) no part of any premiums under the policy has been deductible in calculating the income of the insured for income tax purposes, and

(c) the conditions in sections 737 and 738 and, so far as applicable, those in sections 739 and 740 are met in relation to the policy.

(2) Subsection (1)(b) is subject to section 743.

(3) For the meaning of “the insured”, see sections 742 and 743(2).

Health and employment risks and benefits

736

(1) For the purposes of sections 735 and 737 to 743, a policy insures against a health risk if it insures against the insured becoming, or becoming in any specified way, subject—

(a) to any physical or mental illness, disability, infirmity or defect, or

(b) to any deterioration in a condition resulting from any such illness, disability, infirmity or defect.

(2) For the purposes of sections 735 and 737 to 743, a policy insures against an employment risk if it insures against circumstances arising as a result of which the insured ceases—

(a) to be employed or hold office, or

(b) to carry on any trade, profession or vocation.

(3) For the purposes of section 735, this section and sections 737 to 743, references to insurance against a risk include insurance providing for benefits payable otherwise than by way of indemnity if the circumstances insured against occur.

Period for which payments may be made

737

(1) The condition in this section is that the only annual payments provided for by the policy which relate to the health or employment risk it insures against (“the insured risk”) are payments in respect of one or more of the following periods.

(2) They are—

(a) a period throughout which an illness, disability, infirmity or defect insured against by the part of the policy relating to the insured risk continues,

(b) a period throughout which, in circumstances insured against by the part of the policy relating to the insured risk, the insured is unemployed, does not hold an office or is not carrying on a trade, profession or vocation,

(c) a period throughout which, in circumstances insured against by the part of the policy relating to the insured risk, the insured's income is less than it would otherwise have been, and

(d) where a period within paragraph (a), (b) or (c) ends with the death of the insured, a period immediately following that period.

(3) For the purposes of subsection (2)(a), an illness, disability, infirmity or defect is treated as continuing during a period of convalescence or rehabilitation related to it.

(4) For the purposes of subsection (2)(c), income from the policy is ignored.

Risk of significant loss

738

(1) The condition in this section is that throughout the period that the policy has contained provisions relating to the health or employment risk those provisions have been such that any policy of insurance which only contained those provisions would involve the possibility that the insurer would make a significant loss on the premiums.

(2) In determining whether a policy would involve that possibility, any return on the investment of the premiums is to be taken into account.

(3) For this purpose reinsurance is ignored.

Conditions to be met by policies also providing other benefits

739

(1) The conditions in this section only apply if the policy provides for the payment of benefits which do not all relate to the health or employment risk.

(2) The conditions are that so far as the policy's terms relate to the health or employment risk—

(a) they do not differ significantly from what they would have been if the only benefits had been those relating to that risk, and

(b) the way in which they are given effect does not differ significantly from the way in which they would have been given effect in that case.

(3) A difference relating only to the reduction of benefits payable to or in respect of a person because of other benefits being payable to or in respect of the person is to be ignored.

(4) For the purposes of this section, all the persons for whose benefit the policy provides insurance against the health or employment risk are to be considered.

Conditions to be met where policies are linked

740

(1) The conditions in this section only apply if—

(a) the insured is or has been the insured under one or more other policies (“connected policies”), and

(b) each of the connected policies has been in force either—

(i) at a time when the policy in question was in force, or

(ii) at the time immediately before it was entered into.

(2) The conditions are that so far as the terms of the policy relate to the health or employment risk—

(a) they do not differ significantly from what they would have been if no connected policies had been entered into, and

(b) the way in which they are given effect does not differ significantly from the way in which they would have been given effect in that case.

(3) A difference relating only to the reduction of benefits payable to or in respect of a person under the policy because of benefits being payable to or in respect of the person under any of the connected policies is to be ignored.

(4) For the purposes of this section, all the persons for whose benefit the policy provides insurance against the health or employment risk are to be considered.

Aggregation of policies where employment ends for health reasons

741

(1) This section applies if—

(a) payments are made to or in respect of a person who has left employment because of the occurrence of something insured against by an employment policy as a health risk,

(b) the payments are made under another policy (“the replacement policy”) which was entered into under, or in accordance with, provisions contained in the employment policy,

(d) the rights in accordance with which the payments are made under the replacement policy superseded rights under the employment policy with effect from the time when that policy ceased to apply to the person.

(2) The employment policy and the replacement policy are to be treated as a single policy for the purposes of sections 735 to 738, this section and section 743.

(3) In this section—

“employment” includes an office, and “employees” and “employer” are to be read accordingly, and

“employment policy” means a policy entered into wholly or partly for the benefit of the employees of an employer against a health risk.

Meaning of “the insured”

742

In sections 735 to 737 “the insured” includes—

(a) the insured's spouse or civil partner ,

(b) any child under 21 of the insured or the insured's spouse or civil partner , and

(c) any person on whom any liabilities arising from an actual or proposed transaction identified in the policy will fall jointly with the insured or the insured's spouse.

Policies for the benefit of others who contribute to premiums

743

(1) This section applies if—

(a) a policy of insurance is taken out by one person (“A”) wholly or partly for the benefit of another (“B”),

(b) B makes payments or contributions in respect of the premiums, and

(c) annual payments under the policy are wholly or partly attributable, on a just and reasonable basis, to the payments or contributions made by B.

(2) So far as those benefits are so attributable, B is to be treated as the insured in relation to that policy for the purposes of sections 735 to 742.

(3) So far as those benefits are so attributable, payments or contributions not made by B are ignored for the purposes of section 735(1)(b) (no part of the premiums to have been deductible in calculating the insured's income).

Payments to adopters

Payments to adopters: England and Wales

744

(1) No liability to income tax arises in respect of the following payments—

(a) any payment or reward falling within section 57(3) of the Adoption Act 1976 (c. 36) (payments authorised by the court) which is made to a person who has adopted or intends to adopt a child,

(b) payments under section 57(3A)(a) of that Act (payments by adoption agencies of legal or medical expenses of persons seeking to adopt),

(c) payments of allowances under regulations under section 57A of that Act (permitted allowances to persons who have adopted or intend to adopt children),

(d) payments of financial support made in the course of providing adoption support services within the meaning of the Adoption and Children Act 2002 (c. 38) (see section 2(6) and (7) of that Act), ...

(e) payments made under regulations under paragraph 3(1) of Schedule 4 to that Act (transitional and transitory provisions: adoption support services),

(f) payments made under regulations under section 14F of the Children Act 1989 (special guardianship support services) to a person appointed as a child's special guardian,

(g) payments made to a person under section 17 of that Act (provision of services for children in need, their families and others) by reason of that person being a person named in a child arrangements order as a person with whom a child is to live ,

(h) payments made to a person, in respect of a child, under paragraph 15 of Schedule 1 to that Act (local authority contribution to child's maintenance to recipients with whom child is living, or is to live, as a result of a child arrangements order ), and

(i) payments made in accordance with—

(i) an order under that Schedule (orders for financial relief against parents etc), or

(ii) a maintenance agreement,

for the benefit of a child, to a person appointed as the child's special guardian or a person named in a child arrangements order as a person with whom the child is to live .

(j) payments made to a person under sections 37 to 39 of the Social Services and Well-being (Wales) Act 2014 (meeting care and support needs of children) by reason of that person being named in a child arrangements order as a person with whom a child is to live.

(2) But a payment is not within subsection (1)(f), (g), (h) , (i) or (j) if—

(a) it is made to an excluded relative of the child,

(b) it is made to a person appointed as the child's special guardian and an excluded relative is also appointed as the child's special guardian, or

(c) it is made to a person (“P”) named in a child arrangements order as a person with whom the child is to live and an excluded relative who lives in the same household as P is also named in that order as a person with whom the child is to live.

(3) In this section—

“excluded relative”, in relation to a child, means—a parent of the child, ora person who is, or has been, the husband or wife or civil partner of a parent of the child;

“maintenance agreement” has the meaning given by paragraph 10(1) of Schedule 1 to the Children Act 1989;

“child arrangements” has the meaning given by section 8 of that Act.

Payments to adopters: Scotland

745

(1) No liability to income tax arises in respect of the following payments—

(a) any payment which is an excepted payment by virtue of paragraph (a) or (c) of subsection (2) of section 73 of the Adoption and Children (Scotland) Act 2007 (asp 4), which is made to a person who has adopted or intends to adopt a child,

(b) payments which are excepted payments by virtue of paragraph (b) of that subsection,

(d) payments of allowances in accordance with an adoption allowances scheme under section 71 of that Act,

(e) payments made to a person under section 50 of the Children Act 1975, or section 22 of the Children (Scotland) Act 1995, by reason of that person being a person with whom a child is to live by virtue of a residence order, and

(f) payments of aliment made—

(i) in accordance with an award of aliment under the Family Law (Scotland) Act 1985, or

(ii) under an agreement (within the meaning of section 7(5) of that Act),

for the benefit of a child, to a person in whose favour a residence order with respect to the child is in force.

(2) A payment is not within subsection (1)(e) or (f) if—

(a) it is made to an excluded relative of the child, or

(b) it is made to a person in whose favour a residence order is in force with respect to the child and that order is also in favour of an excluded relative.

(3) In this section—

“excluded relative”, in relation to a child, means—a parent of the child, ora person who is, or has been, the husband or wife or civil partner of a parent of the child;

“residence order” has the meaning given by section 11(2)(c) of the Children (Scotland) Act 1995.

Payments to adopters: Northern Ireland

746

(1) No liability to income tax arises in respect of the following payments—

(a) any payment or reward falling within Article 59(2)(b) of the Adoption (Northern Ireland) Order 1987 (S.I. 1987/2203 (N.I. 22)) (payments authorised by the court) which is made to a person who has adopted or intends to adopt a child,

(b) any payment under Article 59(2)(c) of that Order (payments by registered adoption societies) which is made to a person who has adopted or intends to adopt a child, ...

(c) payments of allowances under regulations under Article 59A of that Order (permitted allowances to persons who have adopted or intend to adopt children),

(d) payments made to a person under Article 18 of the Children (Northern Ireland) Order 1995 (S.I. 1995/755 (NI 2)) (general duty of authority to provide personal social services) by reason of that person being a person in whose favour a residence order with respect to a child is in force,

(e) payments made to a person, in respect of a child, under paragraph 17 of Schedule 1 to that Order (local authority contribution to child's maintenance to recipients in whose favour residence order is in force), and

(f) payments made in accordance with—

(i) an order under that Schedule (orders for financial relief against parents etc), or

(ii) a maintenance agreement,

for the benefit of a child, to a person in whose favour a residence order with respect to the child is in force.

(2) But a payment is not within subsection (1)(d), (e) or (f) if—

(a) it is made to an excluded relative of the child, or

(b) it is made to a person in whose favour a residence order is in force with respect to the child and that order is also in favour of an excluded relative.

(3) In this section—

“excluded relative”, in relation to a child, means—a parent of the child, ora person who is, or has been, the husband or wife or civil partner of a parent of the child;

“maintenance agreement” has the meaning given by paragraph 12 of Schedule 1 to the Children (Northern Ireland) Order 1995;

“residence order” has the meaning given by Article 8 of that Order.

Power to amend sections 744 to 746

747

The Treasury may by order amend section 744, 745 or 746 for the purposes of—

(a) adding a description of payment, or

(b) removing a description of payment if the power to make a payment of that description has been repealed or revoked or has otherwise ceased to be exercisable.

Payments by persons liable to pool betting duty

748

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Chapter 9 — Other income

Interest only income

Interest paid under repayment supplements

749

No liability to income tax arises in respect of interest paid under—

(a) section 824 of ICTA (repayment supplements: individuals and others), ...

(b) section 283 of TCGA 1992 (repayment supplements), or

Interest from tax reserve certificates

750

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Interest on damages for personal injury

751

(1) No liability to income tax arises in respect of interest on damages for personal injury or death if—

(a) it is included in a sum awarded by a court,

(b) it does not relate to the period between the making and satisfaction of the award, and

(c) in the case of an award by a court in a country outside the United Kingdom, it is exempt from any charge to tax in that place.

(2) No liability to income tax arises in respect of interest if—

(a) it is included in a payment in satisfaction of a cause of action (including a payment into court), and

(b) it would fall within subsection (1) if it were included in a sum awarded by a court in respect of a cause of action.

(3) In subsection (1)—

“damages” in Scotland includes solatium, and

“personal injury” includes disease and impairment of physical or mental condition.

752

(1) This section applies if—

(a) a scheme is set up to comply with section 682(2)(b) of the Companies Act 2006 (c. 46) (financial assistance for the purposes of an employees' share scheme), and

(b) under the scheme the trustees receive interest from a participant in the scheme.

(2) So far as the scheme requires the trustees to pay to the company an equivalent amount as interest, no liability to income tax arises under Chapter 2 of Part 4 for the trustees in respect of the interest they receive.

Interest on repayment of student loan

753

(1) No liability to income tax arises in respect of interest if—

(a) it is paid to a person to whom a student loan has been made, and

(b) it relates to an amount repaid to the person after being recovered from the person in respect of the loan.

(2) In this section “student loan” means a loan made under—

section 22 of the Teaching and Higher Education Act 1998 (c. 30),

section 73(f) of the Education (Scotland) Act 1980 (c. 44), or

Article 3 of the Education (Student Support) (Northern Ireland) Order 1998 (S.I. 1998/1760 (N.I. 14)).

Redemption of funding bonds

754

(1) The redemption of funding bonds is not treated as the payment of interest on a debt for income tax purposes if their issue was treated under section 380 of this Act or section 413 of CTA 2009 as the payment of interest on the debt.

(2) In this section “funding bonds” includes any bonds, stocks, shares, securities or certificates of indebtedness.

Interest on foreign currency securities etc. owned by non-UK residents

755

(1) This section applies to interest on—

(a) such foreign currency securities issued by a local authority or a statutory corporation as the Treasury direct, and

(b) such foreign currency loans made to a statutory corporation as the Treasury direct.

(2) No liability to income tax arises in respect of interest to which this section applies if—

(a) in the case of interest on a security, its beneficial owner is a non-UK resident, and

(b) in the case of interest on a loan, the person for the time being entitled to repayment or eventual repayment is a non-UK resident.

(3) But interest is not exempt under subsection (2) because a person is a non-UK resident if it is treated as another person's income under—

Chapter 5 of Part 5 (settlements: amounts treated as income of settlor), or

Chapter 2 of Part 13 of ITA 2007 (anti-avoidance provisions: transfer of assets abroad).

(4) In this section—

“company” means a company, as defined in section 1(1) of the Companies Act 2006 (c. 46) ...,

“foreign currency”, in relation to loans and securities, has the meaning given by section 756, and

“statutory corporation” means—a corporation incorporated by an Act (other than a company), orany other corporation on which functions connected with carrying on an undertaking are conferred by an Act or by an order made under or confirmed by an Act.

Which securities and loans are foreign currency ones for section 755

756

(1) For the purposes of section 755, a security or loan is a foreign currency one if under its terms the currency to be used for repayment is not sterling.

(2) Subsection (1) is subject to the following qualifications.

(3) A security issued before 6th April 1982 is a foreign currency one if under its terms the currency to be used for repayment is not that of a country specified in Schedule 1 to the Exchange Control Act 1947 (c. 14) at the time of the issue of the security.

(4) A loan made before that date is a foreign currency one if under its terms the currency to be used for repayment is not that of a country specified in that Schedule at the time the loan was made.

(5) If in the case of a security there is an option as to the currency to be used for repayment, the security is only to be treated as a foreign currency one if the option is exercisable only by its holder.

(6) If in the case of a loan there is an option as to the currency to be used for repayment, the loan is only to be treated as a foreign currency one if the option is exercisable only by the person for the time being entitled to repayment or eventual repayment.

...

Interest and royalty payments: introduction

757

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Exemption for certain interest and royalty payments

758

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The person making the payment

759

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The person beneficially entitled to the payment

760

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Meaning of “25% associates”

761

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Interest payments: exemption notices

762

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Special relationships

763

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Application of ICTA provisions about special relationships

764

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Anti-avoidance

765

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Interest and royalty payments: interpretation

766

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Power to amend references to the Directive by order

767

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Income from commercial occupation of woodlands

Commercial occupation of woodlands

768

(1) No liability to income tax arises under Chapter 8 of Part 5 (income not otherwise charged) in respect of income arising from the commercial occupation of woodlands in the United Kingdom.

(2) For this purpose the occupation of woodlands is commercial if the woodlands are managed—

(a) on a commercial basis, and

(b) with a view to the realisation of profits.

Housing grants

769

(1) No liability to income tax arises in respect of a payment if it is made—

(a) under an enactment relating to the giving of financial assistance for the provision, maintenance or improvement of housing accommodation or other residential accommodation, and

(b) by way of grant or other contribution towards expenses.

(2) It does not matter whether—

(a) the payment is made to the person who incurs the expenses, or

(b) the expenses have been, or are to be, incurred.

(3) Subsection (1) does not apply so far as the payment is made towards an expense which is deductible in calculating income for any income or corporation tax purpose.

Amounts applied by SIP trustees acquiring dividend shares or retained for reinvestment

770

(1) This section applies if—

(a) shares are awarded to a participant under a Schedule 2 share incentive plan, and

(b) the condition in section 392(3) or (5) is met at the time the shares in question are so awarded (earnings within ITEPA 2003).

This is subject to subsection (4).

(2) No liability to income tax arises for the participant in respect of—

(a) the amount applied by the trustees in acquiring dividend shares on behalf of the participant, or

(b) any amount retained under paragraph 68(2) of Schedule 2 to ITEPA 2003 (amount of cash dividend not reinvested).

(3) Subsection (2) does not affect any liability arising as a result of—

(a) the retained amount later being paid out (see sections 393 and 406), or

(b) the dividend shares ceasing to be subject to the plan (see sections 394 and 407).

(4) This section does not apply if the main purpose or one of the main purposes of the arrangements under which the shares are awarded or acquired is the avoidance of tax or national insurance contributions.

(5) This section forms part of the SIP code (see section 488 of ITEPA 2003: ... share incentive plans).

(6) Accordingly, expressions used in this section and contained in the index in paragraph 100 of Schedule 2 to that Act (... share incentive plans) have the meaning indicated by that index.

(7) In particular—

(a) for the meaning of “dividend shares” see paragraph 62(3)(b) of that Schedule,

(b) for the meaning of “participant” see paragraph 5(4) of that Schedule, and

Foreign income of consular officers and employees

Relevant foreign income of consular officers and employees

771

(1) No liability to income tax arises in respect of relevant foreign income of a consular officer or employee in the United Kingdom for a foreign state if—

(a) Her Majesty by Order in Council directs that this section applies to the foreign state for the purpose of giving effect to a reciprocal arrangement with that state, and

(b) the officer or employee meets conditions A to C.

(2) Condition A is that the officer or employee is not—

(a) a British citizen,

(b) a British overseas territories citizen,

(d) a British Overseas citizen.

(3) Condition B is that the officer or employee is not engaged in any trade, profession, vocation or employment in the United Kingdom, otherwise than as a consular officer or employee of the state in question.

(4) Condition C is that—

(a) the officer or employee is a permanent employee of that state, or

(b) the officer or employee was non-UK resident for each of the 2 tax years preceding the tax year in which the officer or employee became a consular officer or employee in the United Kingdom of that state.

(5) In this section and section 772—

“consular officer or employee” includes any person employed for the purposes of the official business of a consular officer at—any consulate,any consular establishment, orany other premises used for those purposes, and

“reciprocal arrangement” means a consular convention or other arrangement with a foreign state, making similar provision to that made by this section and sections 302, 646A and 681A of ITEPA 2003 in the case of Her Majesty's consular officers or employees in that state.

Further provisions about Orders under section 771

772

(1) An Order in Council under section 771 may limit the operation of that section in relation to a state in any way appearing to Her Majesty appropriate having regard to the reciprocal arrangement with the state.

(2) An Order under that section may be made so as to have effect from a date earlier than that on which it is made, but not earlier than the reciprocal arrangement in question comes into force.

(3) An Order under that section may contain such transitional provisions as appear to Her Majesty appropriate.

(4) A statutory instrument containing an Order under that section is subject to annulment in pursuance of a resolution of the House of Commons.

Income of non-UK residents from certain securities

Income from Inter-American Development Bank securities

773

(1) No liability to income tax arises for a non-UK resident in respect of income from a security issued by the Inter-American Development Bank if the liability only arises because one or more of circumstances A to C apply.

(2) Circumstance A is that the security is issued in the United Kingdom or in sterling.

(3) Circumstance B is that the income is made payable or paid in the United Kingdom or in sterling.

(4) Circumstance C is that the Bank maintains an office or other place of business in the United Kingdom.

Income from securities issued by designated international organisations

774

(1) No liability to income tax arises for a non-UK resident in respect of income from a security issued by an organisation if—

(a) the organisation has been designated by the Treasury for the purposes of this section, and

(b) the liability only arises because one or more of circumstances A to C apply.

(2) Circumstance A is that the security is issued in the United Kingdom or in sterling.

(3) Circumstance B is that the income is made payable or paid in the United Kingdom or in sterling.

(4) Circumstance C is that the organisation maintains an office or other place of business in the United Kingdom.

(5) The Treasury may by order designate for the purposes of this section—

(a) any of the Communities European Union ,

(b) the European Investment Bank,

(6) Condition A is that one of its members is the United Kingdom or any of the Communities European Union .

(7) Condition B is that the agreement under which that member became a member provides for the same kind of exemption from tax for income from securities issued by the organisation as this section provides.

Other

Income towards reducing the national debt

775

(1) This section applies if property is held on trust in accordance with directions which are valid and effective under section 9 of the Superannuation and other Trust Funds (Validation) Act 1927 (c. 41) (validation of trust funds for the reduction of the national debt).

(2) No liability to income tax arises in respect of any of the following—

(a) income arising from the property,

(b) income arising from the accumulation of that income, and

Scholarship income

776

(1) No liability to income tax arises in respect of income from a scholarship held by an individual in full-time education at a university, college, school or other educational establishment.

(2) This exemption is subject to section 215 of ITEPA 2003 (under which only the scholarship holder is entitled to the exemption if the scholarship is provided by reason of another person's employment).

(2A) No liability to income tax arises in respect of income from a payment made under section 23C(5A) of the Children Act 1989 (duty to make payments to former relevant children who pursue higher education) or under sections 110(6) or 112(2) of the Social Services and Well-being (Wales) Act 2014 (duty to make payments to certain young people who pursue higher education).

(3) In this section “scholarship” includes a bursary, exhibition or other similar educational endowment.

VAT repayment supplements

777

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Incentives to use electronic communications

778

No liability to income tax arises in respect of anything received by way of incentive under any regulations made in accordance with Schedule 38 to FA 2000 (regulations for providing incentives for electronic communications).

Gains on commodity and financial futures

779

(1) No liability to income tax arises as a result of Chapter 8 of Part 5 (income not otherwise charged) in respect of a gain arising to a person in the course of dealing in—

(a) commodity or financial futures,

(b) traded options, or

(2) The reference in subsection (1) to a gain arising in the course of dealing in commodity or financial futures includes a gain regarded as so arising under section 143(3) of TCGA 1992 (gains arising from transactions otherwise than in the course of dealing on a recognised futures exchange, involving authorised persons).

(3) In this section—

“commodity or financial futures” means commodity futures or financial futures that are for the time being dealt in on a recognised futures exchange,

“financial option” has the meaning given by section 144(8)(c) of TCGA 1992, and

“traded option” has the meaning given by section 144(8)(b) of that Act.

Disabled person’s vehicle maintenance grant

780

(1) No liability to income tax arises in respect of a disabled person's vehicle maintenance grant.

(2) For this purpose a “disabled person's vehicle maintenance grant” means a grant to any person owning a vehicle that is made under—

(a) paragraph 10 of Schedule 1 to the National Health Service Act 2006 or paragraph 10 of Schedule 1 to National Health Service (Wales) Act 2006

(b) section 46(3) of the National Health Service (Scotland) Act 1978 (c. 29), or

Payments under New Deal 50plus

781

(1) No liability to income tax arises in respect of a payment that is made—

(a) by way of training grant under the “New Deal 50plus” scheme, and

(b) to a person as a participant in that scheme.

(2) For this purpose the “New Deal 50plus” scheme means —

(a) the scheme under section 2(2) of the Employment and Training Act 1973 (c. 50) known as “New Deal 50plus”, or

(b) the corresponding scheme under section 1 of the Employment and Training Act (Northern Ireland) 1950 (c. 29 (N.I.)).

Payments under employment zone programme

782

(1) No liability to income tax arises in respect of a payment that is made to a person as a participant in an employment zone programme.

(2) For this purpose an “employment zone programme” means an employment zone programme established for an area or areas designated under section 60 of the Welfare Reform and Pensions Act 1999 (c. 30).

Chapter 10 — General

General disregard of exempt income for income tax purposes

783

(1) Amounts of income which are exempt from income tax as a result of this Part (whether because the type of income concerned is exempt from every charge to income tax or because it is exempt from every charge that is relevant to those particular amounts) are accordingly to be ignored for all other income tax purposes.

(2) There are exceptions to this in the following cases.

(2A) Interest on deposits in ordinary accounts with the National Savings Bank which is exempt under this Part from every charge to income tax is not to be ignored for the purpose of providing information.

(2B) Interest paid to or in respect of victims of National-Socialist persecution which is so exempt is not to be ignored for the purposes of sections 17 and 18 of TMA 1970 (information provisions relating to interest).

(3) These express exceptions to subsection (1) are without prejudice to the existence of any other implied or express exception to that subsection (whether in connection with the provision of information or otherwise).

Part 7 — Income charged under this Act: rent-a-room and qualifying care relief

Chapter 1 — Rent-a-room relief

Introduction

Overview of Chapter 1

784

(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).

Person who qualifies for relief

785

(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

Meaning of “rent-a-room receipts”

786

(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 subsection (4)),

(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) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(4) ... 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.

(5) Subsections (6) and (7) apply if—

(a) the receipts would otherwise be brought into account in calculating the profits of a trade, and

(b) the profits of the trade are required under section 24A to be calculated on the cash basis.

(6) Any amounts brought into account under section 96A (capital receipts under, or after leaving, cash basis) as a receipt in calculating the profits of the trade are to be treated as receipts within paragraph (a) of subsection (1) above.

(6A) Subsections (6B) and (7) apply if—

(a) the receipts would otherwise be brought into account in calculating the profits of a UK property business, and

(b) the profits are calculated on the cash basis (see section 271D).

(6B) Any amounts brought into account under section 307E (capital receipts under, or after leaving, cash basis) as a receipt in calculating the profits of the property business 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.

Meaning of “residence”

787

(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.

Meaning of “total rent-a-room amount”

788

(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

The individual’s limit

789

(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 £7500 .

(5) The Treasury may by order amend the sum for the time being specified in subsection (4).

Exclusive receipts condition

790

(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

(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

Full rent-a-room relief: introduction

791

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

Full rent-a-room relief: trading income

792

(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.

Full rent-a-room relief: property income

793

(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.

Full rent-a-room relief: income chargeable under Chapter 8 of Part 5

794

(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

Alternative calculation of profits: introduction

795

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.

Alternative calculation of profits: trading income

796

(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—

$L×TR$

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.

Alternative calculation of profits: property income

797

(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—

$L×PR$

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.

Alternative calculation of profits: income chargeable under Chapter 8 of Part 5

798

(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—

$L×IR$

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

Election not to apply full relief

799

(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.

Election for alternative methodof calculating profits

800

(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).

Time limit on adjustment of assessment

801

(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

Minor definitions

802

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 2 — qualifying care relief

Introduction

Overview of Chapter 2

803

(1) 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 qualifying 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 qualifying 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.

Person who qualifies for relief

804

(1) 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 qualifying care receipts for the tax year.

(4) Subsection (1) is subject to section 804A.

Basic definitions

Meaning of “foster-care receipts”

805

(1) For the purposes of this Chapter an individual has qualifying care receipts for a tax year if —

(a) the receipts are in respect of the provision of qualifying care,

(b) they accrue to the individual during the income period for those receipts (see subsection (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) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(3) ... the income period is the tax year.

(4) Subsections (5) and (6) apply if—

(a) the receipts would otherwise be brought into account in calculating the profits of a trade, and

(b) the profits of the trade are required under section 24A to be calculated on the cash basis.

(5) Any amounts brought into account under section 96A (capital receipts under, or after leaving, cash basis) 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.

Meaning of providing foster care

806

(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.

(2) 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 22C or 59(1)(a) of the Children Act 1989 (c. 41) (provision of accommodation for children by local authorities or voluntary organisations),

(aa) section 81 of the Social Services and Well-being (Wales) Act 2014 (provision of accommodation for children by local authorities).

(b) regulations under section 5 of the Social Work (Scotland) Act 1968 (c. 49),

(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).

(4) 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,

(ba) where the child is in care and there was a child arrangements order in force with respect to the child immediately before the care order was made, a person named in the child arrangements order as a person with whom the child was to live,

(bb) (in Scotland) where the child is in care and there was a child arrangements order in force with respect to the child immediately before the child was placed in care, a person named in the child arrangements order as a person with whom the child was to live, spend time or otherwise have contact,

(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, ...

(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.; and

(e) an individual with whom the child is placed under a placement falling within section 22C(6)(d) of the Children Act 1989.

(f) an individual with whom the child is placed under a placement falling within section 81(6)(d) of the Social Services and Well-being (Wales) Act 2014.

(6) 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.

Calculation of “total foster-care receipts”

807

For the purposes of this Chapter, in calculating an individual's “total qualifying care receipts” for a tax year, no deduction is allowed for expenses or any other matter.

Individual's limit

The individual’s limit

808

(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 adult 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 £20,440.

(3) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

809

(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.

810

(1) This section applies if in a tax year an individual's income period for the individual's qualifying care receipts is a period other than a year.

(2) The individual's share of the fixed amount for the tax year is—

$$AS×D365$where—AS is the fixed amount or (if section 809 applies) the individual's share of the fixed amount, andD is the number of days in the individual's income period.$

The amount per child

811

(1) 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 £515.

(2) The weekly amount for a child is—

(a) £435 for a week throughout which the child is under 11 years old, and

(b) £515 for other weeks.

(3) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(4) If an individual provides qualifying 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

Full foster-care relief: introduction

812

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

Full foster-care relief: trading income

813

(1) This section applies if the individual's qualifying 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.

Full foster-care relief: income chargeable under Chapter 8 of Part 5

814

(1) This section applies if the individual's qualifying 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

Alternative calculation of profits: introduction

815

Sections 816 and 817 (which provide for an alternative method of calculating profits) 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 exceed the individual's limit for the tax year,

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Income Tax (Trading and Other Income) Act 2005

Chapter 8 — Other annual payments

Certain annual payments by individuals

Certain annual payments by individuals

727

Commercial payments

728

Payments for non-taxable consideration

729

Foreign maintenance payments

730

Periodical payments of personal injury damages etc.

Periodical payments of personal injury damages

731

Compensation awards

732

Persons entitled to exemptions for personal injury payments etc.

733

Payments from trusts for injured persons

734

Health and employment insurance payments

Health and employment insurance payments

735

Health and employment risks and benefits

736

Period for which payments may be made

737

Risk of significant loss

738

Conditions to be met by policies also providing other benefits

739

Conditions to be met where policies are linked

740

Aggregation of policies where employment ends for health reasons

741

Meaning of “the insured”

742

Policies for the benefit of others who contribute to premiums

743

Payments to adopters

Payments to adopters: England and Wales

744

Payments to adopters: Scotland

745

Payments to adopters: Northern Ireland

746

Power to amend sections 744 to 746

747

Payments by persons liable to pool betting duty

Payments by persons liable to pool betting duty

748

Chapter 9 — Other income

Interest only income

Interest paid under repayment supplements

749

Interest from tax reserve certificates

750

Interest on damages for personal injury

751

Interest under employees' share schemes

752

Interest on repayment of student loan

753

Redemption of funding bonds

754

Interest on foreign currency securities etc. owned by non-UK residents

755

Which securities and loans are foreign currency ones for section 755

756

...

Interest and royalty payments: introduction

757

Exemption for certain interest and royalty payments

758

The person making the payment

759

The person beneficially entitled to the payment

760

Meaning of “25% associates”

761