Tax relief for Shared Lives Carers

Foster Care Tax Relief

Other issues for carers

Can I claim tax credits?

Tax relief for Shared Lives Carers?

What has changed?

• A new tax relief became available in the tax year ended 5 April 2004 (2003/04) for carers, who care in their homes for vulnerable adults placed with them by local authorities or independent charities.



• The relief allows carers of up to three adults to calculate their profits on a fixed expenses basis, with the minimum of record keeping.



• For carers using the normal income less expenses method to work out their profits - they need only record expenses for a sampling period of say one or three months and then use that expenses figure to estimate expenses for the whole year.



• There is also a favourable regime for respite, or short break, carers.



• HMRC also now accept that day support by Shared Lives Carers is a type of short break and so they can use the same tax allowance as Shared Lives respite carers. This means that the previous agreement of £15 a day per person has gone and instead you are able to offer 182 days a year of day support (or a combination of overnight respite and day support up to 182 days a year) without paying tax.



• You can have a look at how Shared Lives and foster carers are affected by National Insurance Contributions.



• You can also see by clicking here, how your foster care profits might affect any claim you make for Working Tax Credit or Child Tax Credit.

What happened before the new tax relief?

Before 2003/04, Shared Lives Carers could work out their profits in one of several ways:

• If you were a respite carer you could use what is called rent-a-room relief, or alternatively you could work out your profits by treating the income as casual receipts and taking off relevant expenses.



• If you were a full time carer with one to three adults resident with you at any one time, you could apply the rent-a-room scheme, or you could use an alternative method referred to as 'minimum expenses'.



• Under this rule, the Revenue would accept a minimum level of expenses of £82 a week for the first adult and £66 a week for the second and third, or alternatively they could agree a different figure with you.



• Any profit above and beyond your expenses or 'minimum expenses' would be taxed as profits of self-employment.



• If you were a full time carer with more than three adults resident with you at any one time, you would have been treated as self-employed and would have needed to work out your profits after expenses and complete the self-employed pages of the self-assessment tax return.

What are the simplified rules?

In order to benefit from the simplified rules, you must satisfy the following conditions:

1. you provide accommodation and a 'significant degree' of personal or non-personal care to the service user (somebody over the age of 18); and
2. the service user has been placed with you through an Shares Lives Carers scheme operated by:
   1. a local authority,
   2. a HSS trust (Northern Ireland),
   3. an independent body; and
3. the service user effectively becomes part of the carer's family.

The Revenue accept that all Shared Lives Carers in schemes recognised by NAAPS fall within the above conditions, and other schemes are considered on their facts.

Under the revised arrangements, Shared Lives Carers are grouped in the same three categories as before:

1. Full-time carers with 1-3 adults at any one time;

You will be treated as a full time carer if you provide over 182 days of care. This is worked out by totalling the number of days each service user is in your care.

There are three possible ways of working out your taxable profit as a Shared Lives Carer:

(a) Rent-a-room

• If your total receipts from providing care are less than or equal to £4,250 per year then you are said to be exempt. You will not need to declare anything on a self-assessment tax return even if you need to complete one because you have other income, or need to claim a repayment of tax.



• If your total receipts are over £4,250 per year you have two options:
  • You can be taxed on the excess over £4,250 without claiming any expenses or capital allowances; or
  • You can be taxed on the full amount of your receipts but you can claim your expenses and capital allowances
  
  
• You can see how this works in Example 1.



• Bookkeeping for rent-a-room is easy as if you are unlikely to go over the £4,250 limit, you only need to keep records of your receipts but not your expenses.



• However, if there is a chance that you might go over this limit, you would be well advised to keep full details of your expenses so that you can work out the best way to have your income taxed.

(b) Fixed expenses method

• This method was designed with the Shared Lives Carer in mind. It is based on a figure accepted by the Revenue as being the amount of expenses and capital allowances you are likely to incur per week per adult you have staying with you.



• The fixed expenses amounts at present are:
  
  

  First resident   -   £400 per week
  Second resident  -   £250 per week
  Third resident   -   £250 perweek
  

• If you are a self-employed Shared Lives Carer - we generally say that your accounting period is the 12 months up to the date when you make up your accounts.

  So if you make up your accounts to 31 December each year, the period from 1 January to 31 December is your accounting period and the date to which you make up the accounts i.e. 31 December is your accounting date.

  The Revenue also call this your basis period - the profits you will be taxed on for any tax year will be those to the accounting date ending in that particular year - so if your accounting date is 31 December - your accounts for the year ending 31 December 2008 will be the profits you are taxed on for 2008/09.

  You can find more information on accounting periods and accounting dates by looking at how to work out your taxable profits.

• You then need to work out your expenses based on the above weekly amounts for your accounting period. This will then give you your fixed expenses total for the year.

  Total all your receipts of income from Shared Lives caring for the accounting period.

  • If your expenses using the above figures are equal to or more than your income you will be treated as having a profit of £nil for the year. Note that even if your expenses are greater, you cannot claim a loss when you use the fixed expenses method.
  
  
  
  • If your expenses using the above figures are less than your income you will be treated as having a profit of the difference between the two amounts.
  
  

  You can see how this works in Example 2.

• As with method (a) - the rent-a-room scheme, you need not keep detailed expenses records unless your expenses are likely to be more than the weekly amounts above in which case you might prefer to use the normal actual income less expenses method.
  
  You can find details of the income less expenses method in the next section.



• If you are likely to break even using the above fixed expenses or if your actual expenses are less than the above amounts - you will be better off using the fixed expenses method.



• However if you are likely to want to claim a loss for the year you must use the standard income less expenses method instead. We look at this in Example 3.

(c) Actual income & expenses

• Under the new simplified arrangements you still have the option of calculating your profit or loss in the usual way by working out your total income and deducting your expenses and capital allowances for your accounting period.



• However, there is now a slight change intended to make record keeping easier.
  
  It is now possible for you to keep records of recurring expenses such as food, clothing, toiletries, etc. for a sampling period of one to three months and you then multiply these figures by twelve (for a one month sampling period) or four (for a three month sampling period) to reach an estimate of expenses for the year.
  
  You can see how this is worked out in Example 4



• You will need to keep all details of expenditure and receipts for the sampling period only, but even if not keeping detailed records for other periods in the year it is wise to be alert for any changes in your pattern of expenditure.
  
  We look at this last point in Example 6



• It is worth bearing in mind that both capital allowances and loss relief may be claimed when using this method.
  
  You can see the situation when someone has a loss in Example 5

2. Part-time or respite carers;

• The new simplified arrangements are also intended to help you if you are a respite carer.



• If you are not a full-time carer (as explained above - that is to say you provide 182 days or less of care in the tax year) then you will have no profit to report each tax year.



• The only records you need to keep in such situations are proof of the number of residents and their days in your care.



• If however, you provide more than 182 days care, then you will have the same options as above for full time carers with 1-3 adults in their care. Have a look at the simple example below which sets this out.

3. Full-time carers with more than 3 adults at any one time.

• If you provide full-time care to more than three adults you are required to work out your profit or loss by looking at your actual income and expenses as explained in 1(c) above. You cannot use the new fixed expenses method we looked at in 1(b) above.
• You can see how to work this out in Examples 4,5 & 6

Do I need to complete a self-assessment tax return?

• If you received a tax return for the 2007/08 tax year, you should also get one for 2008/09.



• Paper returns will now have to be filed by 31 October. This is earlier than the existing deadline and consequently for the 2007/08 return it means filing the form by 31 October 2008. An automatic penalty will be charged if a paper return is received after this date.



• Online returns must be filed by 31 January. If it is intended to file a return after 31 October it will need to be filed online. So the deadline for filing the 2007/08 return online is 31 January 2009. Once again, an automatic penalty will be charged if it is received after this date.



• The filing obligation is satisfied by the first return received by HMRC and this also triggers any late filing penalty. So if, for example, a paper 2007/08 return is filed after 31 October 2008, it is not then possible to avoid a late filing penalty by filing the return online.



• If your profits are wholly covered by the rent-a-room or fixed expenses limits you will need to show nil income from Shared Lives caring in the supplementary self-employed pages.



• This should then ensure that you do not get a tax return for 2008/09 unless you have other income or you want to claim a repayment and need to complete a return on that basis.

Back to the top

Foster Care Tax Relief

What has changed?

• Foster carers are normally treated as being self-employed.



• From 6 April 2003 a new tax relief was introduced for self-employed foster carers. The relief has effect for the tax year 2003/04 (year starting 6 April 2003) and later years.



• Under the Simplified method, from your total foster care receipts you take off:
  
  
  • a £10,000 fixed amount per household, and
  • a further £200 a week for each child under age 11 or £250 a week for each child age 11 or over. The higher amount of £250 starts in the week in which the child reaches their 11th birthday.
  
  You are then taxed on the balance. If there is a nil balance, you are exempt from tax on your foster care income for 2008/09. If there is a negative balance, you are exempt, but cannot claim any loss relief.
  
  The above deductions may increase in future tax years.
  
  You can still use the Standard method to work out your profits for the year if this will be more beneficial for you. This method involves simply taking your total receipts less expenses and capital allowances.
  
  You can get more information and advice on which method is best for you from the Revenue.
  
  
• If you want to see more details and some examples of how to work out the new relief please read on.



• We also have a look in this part of the website at National Insurance Contributions and how foster carers are affected by the different types of contribution.



• You can also see by clicking here, how your foster care profits might affect any claim you make for Working Tax Credit or Child Tax Credit.

Who gets the relief?

• This relief will apply to you if you provide foster care for children or young people up to age 18 and you receive income for doing so.



• You will need to be providing your services to a local authority (HSS Trust in Northern Ireland) or to an independent fostering provider or voluntary organisation.



• The relief does not apply to income received from private fostering arrangements.



• Additionally a child's parents cannot claim nor can those in favour of whom a residence order (contact order in Scotland) is made.



• If you are an Shared Lives Carer looking after an elderly or vulnerable adult in your own home please click on the link to see a relief that may apply to you.
  
  To qualify for the new relief basically you must provide accommodation and a substantial amount of care to the service user (somebody over the age of 18) you are helping, and that person must have been placed with you through a Shared Lives Carer scheme operated by a local authority, or a HSS trust (Northern Ireland), or an independent body, and the service user you care for should effectively become part of your family.
  
  The Revenue accept that all Shared Lives Carers in schemes recognised by NAAPS fall within the above conditions, and other schemes are considered on their facts.
  
  There are also favourable new rules for Shared Lives Carer providing respite care.
  
  If you want more information and some examples of how the new rules work - you can find that by clicking here

What do I need to know before I can work out my relief?

• What are total foster care receipts?
  
  These include all income from a local authority or other fostering provider including any payments that were previously treated as non-taxable.



• What is an income period?
  
  
  • If you are a self-employed Shared Lives Carer - we generally say that your income period is the 12 months up to the date when you make up your accounts.
  
  
  
  • So if you make up your accounts to 31 December each year, the period from 1 January to 31 December is your income period and the date to which you make up the accounts i.e. 31 December is your accounting date.
  
  
  
  • The Revenue also call this your basis period - the profits you will be taxed on for any tax year will be those to the accounting date ending in that particular year - so if your accounting date is 31 December - your accounts for the year ending 31 December 2008 will be the profits you are taxed on for 2008/09.
  
  
  
  • You can find more information on accounting periods and accounting dates by looking at How do I work out my taxable profits?
  
  
  
  • If however you just receive casual one-off receipts from foster caring - your year-end will be 5 April each year and so your income period will be from 6 April to 5 April.
  
  
  
• What is a qualifying amount?
  
  

  This is the amount which you can receive for your caring activities free of tax. It is made up of two amounts:

  • A fixed amount for each household of £10,000 a year and;
  • An amount per foster child placed with you
  
  
  
  • A fixed amount for each household of £10,000 a year
  
  
  

  If there are two or more carers in the house receiving their foster care income separately, the limit is divided equally between them.

  If you are a carer for less than a full year then you will get a proportion of the fixed amount based on the number of days you were a foster carer in that year.There are no regional changes to this amount depending on where you live in the country, nor is there any addition if you look after disabled children.

  • An amount per foster child placed with you
    
    

    For this part of the qualifying amount - a week is said to be a period of 7 days beginning with a Monday.

    If a week falls into two income periods - it falls into the income period that ends during that week.

    The amount per week for 2007/08 & 2008/09 is:

    £200 a week for a child under age 11
    £250 a week for a child age 11 or over including the week in which the child reaches their 11th birthday

  If the child is only placed with you for part of a week - the amount per child is allocated in full for that week.

  
  

  Example 1 Carrie Green is a self-employed foster carer. She makes her accounts up to 05 April each year so her accounting date is 05 April. Carrie looks after 2 foster children: Amy, who was 10 on 1 May 2006 and Emma, who is 13. Both children were already in her care on 6 April 2008. Carrie's 'qualifying amount' for the tax year 2008/09 is calculated as follows - to do this we work on the age of the children in her care in the year 06 April 2008 - 05 April 2009: Fixed amount =  £10,000 Amount per child Amy   -   52 weeks x £200 = £10,400 Emma   -   52 weeks x £250 = £13,000 Total qualifying amount = £33,400

  
  
  
• What happens to my qualifying amount if my income period does not end on 5 April each year?
  
  For 2008/09
  
  The reliefs shown above will apply for the income period that ends in the respective tax year.
  
  

  Example 2 Sara Cox is a self-employed foster carer. She makes her accounts up to 31 December each year so her accounting date is 31 December. Sara looks after 2 foster children: Jack, who was 11 on 30 September 2008 and Josh, who is 14 and who joined the family on 1 April 2008. Sara's 'qualifying amount' for the tax year 2008/09 is calculated as follows - to do this we work on the age of the children in her care in the year 1 January 2008 - 31 December 2008: Fixed amount =  £10,000 Amount per child: Jack 34 weeks x £200 (see note 1.) 18 weeks x £250 (see note 2.) Total for Jack = £11,300 Josh 40 weeks x £250 (see note 3.) Total for Josh = £10,000 Total qualifying amount = £31,300 Notes: 1. Week commencing 3 January 2008 (first full week of income period) to week commencing 19 September 2008(week before Jack's 11th birthday). 2. Week commencing 26 September 2008 (week in which Jack's 11th birthday falls) to week commencing 26 December 2007 (week in which income period ends). 3. Week commencing 31 March 2008 (start of week in which Josh joins the family) to week commencing 26 December 2008.

  
  
  For 2009/10 and later years
  
  

  If your income period falls into two or more tax years:

• The fixed amount will be at the rate for the year in which your income period ends and;



• To work out the amount per child - divide your income period between the different tax years it falls into. You will then get so many weeks in year 1 at the rate set for that tax year and so many weeks in year 2 at the rate set for that later year. This is easier to see in an example.
  
  

  Example 3 Looking again at Sara in Example 2 - her income period for 2009/10 is the year from 1 January 2009 to 31 December 2009. On the basis that Jack and Josh are still in her care throughout her income period - we shall assume that the rates for 2009/10 will increase so that the fixed amount will be £11,000 with the amounts per child for 2009/10 being £220 per week for a child under age 11 and £270 per week for a child over age 11. To work out the qualifying amount: We use the fixed amount at the rate for the year in which her income period ends. The year in which 31 December 2009 falls is 2009/10. We therefore use the assumed rate for that year - £11,000. For the amount per child we need to break the year up into the number of weeks falling in the tax year 2008/09 (from 1 January 2009 to 05 April 2008) - 13 weeks and those falling into the tax year 2009/10 (06 April 2009 to 31 December 2009) - the remaining 39 weeks. Jack 13 weeks at £250 (2008/09 rate) = £3,250 39 weeks at £270 (2009/10 assumed rate) = £10,530 Total amount for Jack for 2008/09 = £13,780 Josh 13 weeks at £250 (2008/09 rate) = £3,250 39 weeks at £270 (2009/10 assumed rate) = £10,530 Total amount for Josh for 2008/09 = £13,780 Total qualifying amount (£11000 + £13780 + £13780) =  £ 38,560

  
  
  

How is the relief made up?

The relief is in two parts depending on whether or not your income is more than the qualifying amount or vice versa:

• You will receive an automatic exemption if total foster care receipts for an income period are less than the qualifying amount. This means that you do not need to work out your profits and expenses in the normal way as your profit is taken to be nil. The exemption is mandatory if it applies to you.
  
  If you have any overlap relief (this relates to the year when you started in business or 1996/97 whichever is earlier - you can ask the Revenue to check it for you) this will not be lost.



• If your total foster care receipts for your income period are more than the qualifying amount - there is a simplified way of working out your profits which you can use instead of the standard method.
  
  

  Example 4 Looking again at Carrie Green from Example 1 - her total qualifying amount for 2008/09 was £33,400. If her total foster care receipts were £30,000 for her income period to 5 April 2009, Carrie would be exempt as her qualifying amount of £33,400 is more than her income. Alternatively if Carrie's total foster care receipts were £36,000 - she could use the simplified method explained below to work out her profits.

  
  
  

The simplified way of working out your profits

• Working it out

  
  
  • As we mentioned above if your total foster care receipts for your income period are more than the qualifying amount - there is a new simplified way of working out your profits that you can use as an alternative to the standard method.
  
  
  
  • What this means for you is that your profit will be the difference between your total foster care receipts and your qualifying amount. You will not get any capital allowances if you elect for this method of assessing your profits.
  
  

  Example 5 Following on from Example 4 above, Carrie's taxable profit under the simplified method will be the difference between her income of £36,000 and her qualifying amount of £33,400 - giving a taxable profit of £2,600.

  
  
  

Additional care expenses for disabled & special needs children

• If you are dealing specifically with disabled & special needs children, it is quite possible you will find that you will incur extra costs for the children in your care apart from their normal day to day expenses.



• For example, you may need to buy a particular piece of equipment for a disabled child, or incur other one off costs because of the child's special needs. You can add the extra expenditure to your qualifying amount.

How do Leaving Care Act arrangements work?

• The law provides for continued support to allow children in care to move to independence. These rules are in the Leaving Care Act.



• Some local authorities have arrangements equivalent to Shared Lives care and others use supported lodging schemes. With payments made under the Act for children who have left foster care you may be able to use the simplified arrangements for Shared Lives care but the payments are not eligible for foster care relief.

Home Responsibilities Protection

• From 6 April 2003, if you do not need to pay National Insurance Contributions you can claim Home Responsibilities Protection (HRP) for each complete year you are registered as a foster carer. The idea is that HRP will help protect the basic State Pension entitlement of people who are unable to work due to responsibilities at home.



• For more information download form CF411 or you can get the form from the Revenue National Insurance Contributions Office. Their telephone number is Telephone (0191) 213 5000 and their opening hours are: 8.30am to 17.00pm Monday to Thursday, 8.30am to 16.30pm Friday. Alternatively you can get the form from Revenue Enquiry Centres and local DWP offices.

Does my Foster care relief affect my Child Tax Credit (CTC)?

• Have a look at the section for carers claiming tax credits by clicking here.



• You cannot claim Child Tax Credit (CTC) for your foster children apart from very rare cases where the Local Authority do not pay you for their accommodation & maintenance. You can of course claim for your old children.

Does my Foster care relief affect my Working Tax Credit (WTC)?

• Have a look at the section for carers claiming tax credits by clicking here.



• If you or your partner are in qualifying paid work for at least 16 hours a week, you can claim working tax credit provided that you or your partner have a child or children for whom you are responsible (excluding any foster children paid for by the local authority); or either of you has a disability; or you are over 50 years of age and are returning to work after a period of unemployment. Even if none of those provisos applies to you, you can still claim working tax credit if you work at least 30 hours a week.
• Foster care activity counts as qualifying paid work for this purpose, so even if the only work you do is fostering that alone should qualify you for working tax credit, provided that you work the requisite hours.

Claiming tax credits

• Have a look at the section for carers claiming tax credits by clicking here.



• Whether you are entitled to CTC or WTC or to both, you make your claim on a single form TC600. That form requires you to give details of your income. It is worth remembering that your foster caring income for both tax credit and for working out your tax is the same amount. So, if your total foster care receipts are less than your qualifying amount, your profits from foster caring for both tax and tax credits will be nil.



• However if your fostering income is greater than your qualifying amount, any profit must be included in your declaration of taxable profit for tax credit purposes. It will be the same amount as computed for income tax. Also, any other income you or your partner have will be taken into account when claiming tax credit.

Residence Orders

• Residence orders normally follow on from care orders.

  A typical case might be where the parents cannot cope, so the local authority removes the child and takes on parental responsibility while placing the child with a foster carer etc. under a care order.

  The child gets on well with the carer and the local authority encourages the carer to apply for a residence order which will transfer parental responsibility from the local authority to the carer, and in return the local authority continues to pay the fostering allowance on a discretionary basis.

• Payments under Residence Orders are tax-free and do not count as income for tax credits purposes. This is because they are made at the discretion of local authorities on a no charge basis.



• On the other hand payments made under alternative arrangements such as those under a contract may be taxable. This might happen where a local authority contracts to continue making payments to a foster carer in return for the carer agreeing to take on a new legal responsibility for the child. In those circumstances they will be entitled by law to receive the payments.



• The Revenue would generally regard such payments as self employed profits. Although they fall outside foster care relief, from a tax point of view the Revenue would apply the same terms as the simplified arrangements for Shared Lives Carers.

How does my foster care relief affect my personal allowance?

Does your foster care relief affect your personal allowance or vice versa? The simple answer is no - the two reliefs are completely separate.

So that you can see the difference we will just recap on what each relief is and does:

• Your personal allowance



• You will get a personal allowance no matter how your income is made (e.g. wages, savings) up or how much it is. The allowance reduces the total amount of income you pay tax on so you can also look at it as if that part was tax free.



• The personal allowance is £6,035 for 2008/09 for those under 65 throughout that year. The allowance is increased for those 65 and over in the year, depending on their age and income level.
• Foster care tax relief



• Foster care tax relief is a relatively new tax relief which has been introduced for self-employed foster carers. In this case the relief reduces the amount of your foster care profits you pay tax on.



• How this works is that in calculating your profit from your total foster care receipts you take off a £10,000 fixed amount per household, and a further amount depending on the number of children you care for and the age of each child involved.



• You are then taxed on the balance. If there is a nil balance, you are exempt from tax. If there is a negative balance, you are exempt, but cannot claim any loss relief.



• This is called the Simplified method - there is another way of working out your profits called the Standard method.

Back to the top

Can I claim tax credits?

Click on tax credits to access the main section on tax credits.

Will I get Working Tax Credit (WTC)?

• To be able to get WTC you need to be in qualifying remunerative work. In a nutshell this requires you to be working or about to start paid work, to be of a certain age and to work for a certain number of hours a week. If you need more information have a look at the main section on tax credits



• The work you do as a foster carer will qualify under this heading if you are paid under a contract of employment as an employee or you are paid for your foster care services as a self-employed carer.



• Similarly, Shared Lives Carers are regarded as self-employed and their caring activities are treated as 'qualifying remunerative work'.



• There have been occasions over the last two years when the Revenue have incorrectly denied WTC to carers - you can see our article on this here.

Short break or respite carers

• If you are a short break or respite carer offering care on a temporary basis only, and you opt for the rent-a-room option for working out your profits, this is not treated as paid work and so your income is not then 'qualifying remunerative work' for claiming WTC.



• However you now have the option of being taxed using the new rules that apply to foster carers or Shared Lives Carers.



• You should bear in mind that in the case of a joint claim, you and your spouse or partner may have other work apart from caring and this may also be 'qualifying remunerative work' for WTC purposes.

Will I get Child Tax Credit (CTC)?

• You can claim CTC if you are 'responsible' for one or more children or 'qualifying young persons'.



• You are treated as 'responsible' for your own children but not for a child or young person who has been placed with you by the local authority, where the local authority wholly or partly pays the costs of looking after the child. Therefore you can claim CTC for your own children, but cannot normally claim for your foster children.



• This also applies if you are a potential adopter but the local authority pays you for accommodation or looking after the child or both.



• The result of this is that only those carers and adopters of children or young persons who are not paid by a local authority or out of other public funds can claim to be 'responsible' for the child in their care and so can claim CTC for them.



• With CTC, it does not matter if you are in work when you claim.

How does my income from caring affect the tax credits I get?

• The amount of tax credits you get will be based on the level of your household income.



• Generally income from caring will be treated as income for tax credit purposes only to the extent that it is taxable.




Full time carers

• Foster care receipts paid by local authorities and similar agencies are only taken into account in working out tax credit income to the extent that they are taxable. Therefore, if you use the simplified method for working out your profits for income tax self-assessment, your income from foster caring for tax credits purposes will be the amount on which you pay income tax. If your foster care receipts are wholly covered by your tax-exempt amounts, then none of your income from caring is counted in assessing your tax credits entitlement.



• If you are a full time Shared Lives Carer - you will need to include your income from caring on the tax credit claim form, but - again - only the amount that is taxable. This is the figure you get after all expenses have been taken off your receipts, including expenses worked out on the new fixed expenses formula, or - if you are using the standard method of working out your profits for self-assessment - your tax-deductible expenses and other reliefs such as capital allowances.



• If you claim rent-a-room it is only the amount of your profit above the lower limit of £4,250 that you need include on the claim form.

Respite or short term carers

• If you are a respite carer and you provide less than 182 days of care in a tax year - you are treated as having no taxable profit for that year. Any income you receive from respite caring is then ignored for working out whether you are entitled to tax credits.



• If you are a respite or short break carer and you are taxed on the rent-a-room basis, as mentioned above this is not 'qualifying paid income' and will be ignored for tax credit purposes.



• You can of course ask for the rent-a-room rules not to apply to you in which case your income from caring should also be ignored as long as it qualifies for relief under another part of the new rules such as the fixed expenses formula.

Examples

• There are some useful examples you can have a look at. They are in the Revenue leaflet Working Tax Credit & Child Tax Credit - a guide WTC2. This is a comprehensive guide to the new tax credits and is worth a read. You can also get the leaflet from your local tax office.

Helplines

The main helpline is open from 8am - 8pm seven days a week on 0845 300 3900

If you need help using the Internet to apply for tax credits, you can phone 0845 300 3938. This helpline is available 8am - 10pm Monday to Friday, and 10am - 6pm Saturday and Sunday.

Back to the top