Income Tax (Trading and Other Income) Act 2005 section 818

Election for alternative method of calculating profits

Section 818 allows individuals providing qualifying care to elect for an alternative method of calculating their profits, subject to certain conditions, and sets out the procedure and time limits for making or withdrawing such an election.

• An individual who qualifies for qualifying care relief and whose total qualifying care receipts exceed their annual limit may elect to use an alternative profit calculation method, provided the special rules for non-5 April accounting dates do not apply.
• The election must specify the tax year it relates to, and it only has effect for that single year unless the individual withdraws it by notice.
• The election or any withdrawal notice must be submitted by the first anniversary of the normal self-assessment filing date for the relevant tax year, or by a later date if HMRC specifically allows this in a particular case.
• A fresh election is needed for each tax year in which the individual wishes to use the alternative calculation method rather than computing profits in the normal way.