§ Mr. Crouchasked the Chancellor of the Exchequer how allowances payable to adopters by adoption agencies under schemes approved by the Secretary of State for Social Services under section 32 of the Children Act 1975 will be treated for tax purposes.
§ Mr. RidleyWhether these payments are in law taxable will depend on the details of the particular adoption allowance scheme introduced by an adoption agency. The pattern of schemes approved so far indicates that such payments would in general be taxable income in the hands of adopters. However, these schemes are intended to facilitate the adoption of children who would not otherwise readily be adopted, and allowances will be paid only after taking into account the adopter's financial resources—including child benefit—available to support the adopted child. In view of this and of the experimental nature of these schemes we have agreed that the Inland Revenue should introduce an extra statutory concession under which income tax will not be charged on payments under these schemes.