Dáil Éireann debate -
Wednesday, 24 Oct 2001

Vol. 542 No. 6

Written Answers. - Tax Allowances.

Jim O'Keeffe

Question:

100 Mr. J. O'Keeffe asked the Minister for Finance the circumstances under which the home caring spouse tax allowance is payable; and if he will ensure that it is available in all cases of disabled spouses where the other spouse is the sole earner in the household. [25278/01]

Minister for Finance (Mr. McCreevy):

The home carer's tax allowance, now converted into a tax credit, amounting to £3,000 or 3,810 at the standard rate of tax, was introduced in the Finance Act, 2000, in respect of those spouses of married one income families who work in the home caring for children, the aged or incapacitated persons. It may be claimed by a married couple who are jointly assessed to tax and where one spouse, the home carer, cares for one or more dependent persons.

A dependent person is defined as a child in respect of whom child benefit is being paid, a person aged 65 years or over, or a person who is permanently incapacitated by reason of mental of physical infirmity. The definition of a dependent person does not include a spouse as the allowance was never intended to cater for such a situation.

The maximum tax credit due for a tax year is £600 or 762. Where the home carer has income in his or her own right, the tax credit may still be due. The tax credit is due in full where the home carer's income is less than £4,000 or 5,080. Where the carer's income is between £4, 000 or 5,080 and £5,200 or 6,604, the tax credit is reduced by £1 for every £2 of income so that where the income exceeds £5,200 or 6,604, no tax credit will be due. These figures are reduced proportionately for the short tax year, 6 April 2001 to 31 December 2001.

I would point out to the Deputy that an income tax relief is available in respect of the cost of employing a person to care for a permanently incapacitated person, including one's spouse. The carer may be employed on an individual basis or through an agency. The amount of the relief due for a full tax year is the cost of employing the carer subject to a maximum of £10,000 or 12,700 – this equates to £7,400 or 9,398 for the short tax year. Relief can be claimed at the individual's marginal rate of tax.

I have no plans to extend the home carer's tax credit as suggested by the Deputy.