Removing barriers - disability and the tax system

As the Paralympic Games conclude with team GB winning more medals than any nation but China, Robin Williamson reflects on steps taken by legislators over the past three decades to level the playing field for disabled people, and focuses on the particular contribution made by the tax system.

I am certain that all readers of this blog are proud of the fine British athletes who are returning home after competing in the Paralympic Games at Tokyo. At the final tally, our team won 111 medals over 16 different sports, 37 of them gold, coming second in the world after China.

For a disabled person to succeed in a major endeavour such as Paralympic sport requires courage and a strong determination to overcome barriers. In the UK, the focus of anti-discrimination legislation since 1995 has been, as far possible, to remove the obstacles that can stand in the way of a disabled person who wishes participate fully in work and society. Today, the Equality Act 2010 outlaws discrimination against, and promotes equality of opportunity for, not just disabled people but any who share certain other “protected characteristics” such as age, race, religion, sex, sexual orientation, and so forth.

One of the most satisfying aspects of my own career has been working with ministers and officials to try to embed the principles that underpin that Act in the tax system. Over the years, my team and I at the Low Incomes Tax Reform Group were involved in a number of such initiatives. Among these were obtaining exemptions for online filing for those who employ their own carers; establishing a facility for people who could not go online to continue filing returns on paper; the reform of trusts for vulnerable and disabled beneficiaries; and making HMRC’s services more accessible in various ways – notably by setting up the Extra Support service.

The purpose of this article, therefore, is to provide a checklist for tax advisers of points where the tax system plays a part in helping to remove such barriers for your disabled clients. In a piece this size one can only scratch the surface; for more detailed reference I would strongly recommend the commentary on disabled people and carers by the Low Incomes Tax Reform Group.

Help through the VAT system

One way for the tax system to mitigate obstacles for people with disabilities is to give exemptions or reliefs on goods and services that they would not need if they did not have their disability.

For example, certain supplies of goods or services to disabled people for their domestic or personal use, such as construction materials and services for such purposes as widening doors to provide access, may qualify for a zero rate of VAT. Certain mobility aids installed in the home of a person aged 60 or over qualify for a reduced VAT rate of 5%.

Access to work grants

Similarly, a disabled employee is not taxed under the benefits in kind provisions for equipment provided by their employer and funded ultimately by the Access to Work scheme. Otherwise, grants made directly to employees are taxable under normal principles, but to the extent that they are expended on equipment, services etc that are tax-deductible, no tax consequences are likely to arise.

Shared lives relief

Foster carers and other shared lives carers (including those formerly known as adult placement carers) are entitled to generous tax exemptions in respect of the payments made to them by local authorities or agencies for taking on the role. The legislation for qualifying care relief is at ITTOIA 2005, s. 803ff.

Intermediaries, trusted friends and attorneys

A disability or mental health problem may make it difficult for a person to deal with their own tax affairs, in which case they might ask a friend or family member to help them. There are various ways in which that can be done formally, including giving them a power of attorney or making them what HMRC term an intermediary or a trusted helper.

An intermediary is a “friend, relative or voluntary organisation” whom a taxpayer who “is ill, has a disability or does not speak English” can appoint to deal with HMRC on their behalf. The intermediary cannot, however, get online access to the taxpayer’s accounts; for that, they must register as a trusted helper using GOV.UK Verify. Alternatively they can be appointed as an agent using form 64-8, with the various obligations that entails.

There is also a facility for HMRC to deal with a helper on the taxpayer’s behalf over the phone, if the taxpayer is present on the call and gives their consent.

The taxpayer remains legally responsible for their own tax even if they have appointed an attorney, intermediary or trusted helper.

Extra support

The Extra Support service was set up after the closure of HMRC’s local enquiry centres in 2014. Its purpose is to provide the additional help, over and above that given in contact centres, that someone in particularly vulnerable circumstances might need. It does so by telephone and face-to-face, with HMRC advisers often travelling to see taxpayers with mobility problems or who are housebound.

Access to the service is given to those who, when speaking by phone with HMRC contact service advisers, exhibit one or more characteristics that might indicate they qualify for it. That may, for example, be a mental health issue, bereavement, blindness, a communication impairment (deafness, speech impediment) or similarly disabling condition. The contact service adviser who encounters a taxpayer with such a need hands them over to the Extra Support team member who handles the case from then on. The service is also accessible online.

Disabled or vulnerable trusts

Trustees of a trust with a disabled or vulnerable beneficiary may elect to have the trust income and gains taxed at the beneficiary’s rate rather than the higher rates applicable to trusts. There is also favourable treatment for inheritance tax purposes. There are strict conditions as to the terms on which a trust qualifies: the disabled person must normally be the sole beneficiary during the lifetime of the trust. The beneficiary must themselves fulfil certain conditions: they must have a mental health condition which prevents them managing their own affairs, or be in receipt of a range of benefits such as a personal independence payment, an increased disablement pension, a constant attendance allowance or an armed forces independence payment. The definition of a qualifying beneficiary was considerably widened from April 2013.

It is vital, if setting up or managing such a trust, to seek specialist professional advice to ensure that all the conditions are met and that the beneficiary’s entitlement to state benefits is not compromised.

Care and support employers

If an elderly, disabled or otherwise vulnerable person needs help from day to day to carry on living independently, they may have a carer, or “personal assistant”, who is supplied by an agency or is hired directly by the person or their family. In the latter case, the person will usually pay the carer’s wages directly either from their own money or from local authority or NHS funding. The carer is then generally treated as an employee of the person, who must take on the normal duties of an employer such as operating a payroll and accounting to HMRC for PAYE and NICs, alongside other employment law obligations such as minimum wage and auto-enrolment.

An employer in this category is known as a “care and support employer. Many use an agency, or the services provided by their local authority, to handle their payroll duties. Care and support employers who meet certain conditions have the option of sending payroll information to HMRC on paper. This recognises that some disabilities make it difficult or impossible for people to use computers or go online.

Since 2015, care and support employers have also been eligible to claim the employment allowance, an exemption from employers’ NIC on the first £4,000 of their carer’s pay.

Making tax digital

When HMRC passed regulations requiring all VAT payers to file and pay online, a group of small traders who could not use computers or the internet challenged them in court on human rights grounds. Three – two electrical contractors and a garage proprietor – were chosen as lead cases and the issues were litigated in the First-tier Tribunal (see LH Bishop Electrical Co Ltd & Ors v HMRC Commrs [2013] UKFTT 522 (TC)). The result was a victory for the taxpayers, and HMRC had to change the regulations so that they were human-rights compliant.

Happily, the lessons of Bishop were learned in time for the advent of Making Tax Digital, and those who are digitally excluded because of age, a disability which makes using a computer accurately very difficult or painful, their location being too remote for a reliable internet connection, or any other reason, now benefit from the same exemption as was enacted following the conclusion of the case. The exemption from filing electronically applies to those for whom it is “not reasonably practicable” to do so owing to their age, disability, remoteness, or any other reason.


There are more than 14.1 million disabled people in the UK. But here, as in most civilised countries, the law in general tries to promote disabled people’s full participation in society. There is always more that could be done, both in the general law and in the tax system, but the more barriers to that are lifted by legislators and administrators, the more society as a whole is able to avail itself of the talents and economic contribution of a substantial cohort of workers and others active in the social sphere.

I hope this article, brief as it is, will point practitioners in the direction of how the tax system can answer to the needs of those clients who fit that description. The 2021 Paralympics are just one testament to what can be achieved.

Robin Williamson MBE CTA (Fellow) is an author and commentator on tax, welfare and public policy. He was technical director of the CIOT’s Low Incomes Tax Reform Group from 2003 to 2018 and a part-time senior policy adviser at the Office of Tax Simplification from 2018 to 2019. In May 2020 he won the lifetime achievement award at the Tolley Taxation Awards. He was recently appointed UK country reporter to the Observatory on the Protection of Taxpayer Rights at the IBFD.

Robin Williamson

Written by Robin Williamson

Robin Williamson MBE CTA (Fellow) is an author and commentator on tax, welfare and public policy. He was technical director of the CIOT’s Low Incomes Tax Reform Group from 2003 to 2018 and a part-time senior policy adviser at the Office of Tax Simplification from 2018 to 2019. In May 2020 he won the lifetime achievement award at the Tolley Taxation Awards. He was recently appointed UK country reporter to the Observatory on the Protection of Taxpayer Rights at the IBFD.

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