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Who is likely to be affected?
- Adoptive families receiving financial support
from local authorities and adoption agencies.
- Local authorities and adoption agencies
who determine whether to provide financial
support and how much support to give.
General description of the measure
- The measure ensures that payments of financial
support to adopters by local authorities or
adoption agencies continue to be free of tax
under new legislation recently brought in
by the Department of Health.
Operative date
- 6 April 2003 for new legislation - though
payments under previous legislation continue
to be free of tax before this date.
Current law and proposed revisions
- Adoption allowances are currently exempt
from tax because of an extra-statutory concession
(ESC A40) given by the Inland Revenue. However,
this concession will not apply to financial
support paid under the new Adoption and Children
Act 2002 so new legislation is being put in
place.
- The proposal in the Budget is to put the
tax exemption of adoption support on to a
statutory footing. Payments of financial support
to adopters across the UK, including existing
adoption allowances, will be free of tax under
primary legislation. The Treasury also intends
to take a power which will allow it to exempt
from tax through secondary legislation any
payments to adopters which might be introduced
in the future. To ensure the list of payments
to adopters in the Taxes Act remains up to
date, the power will also allow the Treasury
to remove from the Taxes Act a description
of a payment to adopters which can no longer
be made.
Further advice
- If you have any questions about this change,
please contact the Public Enquiry Unit on
020 7438 6420 to 6425.
www.inlandrevenue.gov.uk
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