Mr Jones provides foster care for one fourteen year old for the whole of the year and one eight year old for ten weeks of the year. No other foster carers live in his house. His annual accounting date is 5 April. His qualifying amount will be made up as follows:
| Fixed amount | £10,000 |
| Child 1 (52 x £250) | £13,000 |
| Child 2 (10 x £200) | £2,000 |
| TOTAL | £25,000 |
If Mr Jones had total receipts from foster care of £30,000
and made a profit of £8,000 from providing foster care he can
choose between being taxed on:
£8,000 (the
profit method), or
£5,000 (the
simplified method, £30,000 total receipts
less £25,000 exempt amount).
On the other hand if Mr Jones had total receipts from foster
care of £20,000, his receipts from foster care would be exempt
for the year. This is because his total receipts are now less than
his
qualifying amount.
Mrs Smith’s annual accounting date is 30 September. She provides foster care for one fifteen year old for the whole of the year to 30 September 2003 and one six year old for twenty weeks of that year. No other foster carers live in her house. Her qualifying amount for 2003/04 will be made up as follows:
| Fixed amount | £10,000 |
| Child 1 (52 x £250) | £13,000 |
| Child 2 (20 x £200) | £4,000 |
| TOTAL | £27,000 |
If Mrs Smith had total receipts from foster care of £32,000
and made a profit of £10,000 from providing foster care for
2003/04 she can choose between being taxed on:
£10,000 (the
profit method), or
£5,000 (the
simplified method, £32,000 total receipts
less £27,000 exempt amount).
On the other hand if Mrs Smith had total receipts from foster
care of £20,000 for the year ended 30 September 2003, her
receipts from foster care would be exempt for 2003/04. This is
because her total receipts are now less than her
qualifying amount.
