Income Tax (Trading and Other Income) Act 2005 section 821

Meaning of "relevant limit"

Section 821 defines the "relevant limit", a special threshold used to determine the relief available to foster carers and other qualifying care providers whose accounting periods do not align with the tax year.

• The relevant limit applies where a carer's trade accounts are prepared to a date other than 5 April, meaning the accounting period straddles two tax years.
• The relevant limit is calculated by adding together the fixed amount (or the individual's share of it) for the tax year in which the accounting period ends, plus the amounts per adult or child for each portion of the accounting period falling in each relevant tax year.
• The amount per adult or child for each part of the accounting period is worked out as if that part were the entire income period for the tax year in question, applying the rules in section 811.
• The relevant limit replaces the standard "limit" used in simpler cases and ensures that the threshold correctly reflects the care provided across tax year boundaries.