Income Tax (Trading and Other Income) Act 2005 section 745

Payments to adopters, etc: Scotland

Section 745 provides an income tax exemption for certain payments made in Scotland to adoptive parents, prospective adopters, and persons caring for children under residence orders, while excluding payments made to close relatives of the child.

• Certain payments connected with adoption in Scotland are exempt from income tax, including payments under the Adoption and Children (Scotland) Act 2007 made to people who have adopted or intend to adopt a child, and adoption allowance scheme payments under that Act
• Payments made under the Children Act 1975 or the Children (Scotland) Act 1995 to a person with whom a child is to live under a residence order are also exempt, as are aliment payments made under the Family Law (Scotland) Act 1985 for the benefit of a child to a person holding a residence order
• The exemption does not apply where the payment is made to an "excluded relative" of the child — meaning a parent of the child, or someone who is or has been the spouse or civil partner of a parent of the child
• The exemption also does not apply where a residence order is in force in favour of both the recipient and an excluded relative of the child