Income Tax (Trading and Other Income) Act 2005 section 149

Foster-care relief

Section 149 is a transitional provision dealing with the treatment of unallocated capital expenditure when a foster carer who was using the foster-care relief scheme in 2004-05 moves out of the scheme in the following period, specifically where a disposal event has been triggered under the earlier capital allowances rules.

• This provision applies where a deemed disposal event arose for a foster carer under the capital allowances rules in Schedule 36 to FA 2003, and the carer was a qualifying individual for the 2004-05 tax year.
• The carer's chargeable period must correspond to the income period for their foster-care receipts in 2004-05, making it a relevant chargeable period under the foster-care relief rules.
• The provision is triggered when the carer's next chargeable period ceases to be a relevant chargeable period — meaning the carer has moved out of the foster-care relief scheme.
• In that situation, the rule in section 825(4) — which deals with unallocated capital expenditure — is applied so that the first non-relevant chargeable period is treated as the period immediately following 2004-05, ensuring a smooth transition of any outstanding capital expenditure balances into the new regime.