§ Mr. Robert B. Jones
asked the Chancellor of the Exchequer what will be the tax treatment of payments of invalid care allowance to married women.
§ Mr. Norman Lamont
Payments of invalid care allowance to married women are taxable under existing law. But the wife's earned income allowance could not be set against such payments because the law as it stands does not specifically provide for this in the way that it does for other taxable social security benefits paid to wives in their own right. To bring the tax treatment of invalid care allowance into line with the treatment of these other benefits, the Government have decided that a provision should he included in next year's Finance Bill permitting the wife's earned income allowance to be set against payments of invalid care allowance due to married women. The proposed legislation would apply with effect from the tax year 1984–85 so that the wife's earned income allowance would be available against arrears of invalid care allowance which may be payable for periods back to December 1984. Meanwhile the Inland Revenue will give the benefit of the wife's earned income allowance against payments of invalid care allowance to married women for years from 1984–85 on an extra-statutory basis.