Income Tax: scope of qualifying care relief for self-funded Shared Lives payments
Published 22 November 2017
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Who is likely to be affected
This will affect Shared Lives carers who receive payments from Shared Lives schemes where individuals self-fund their care.
General description of the measure
Qualifying care relief is an optional tax simplification scheme available to those providing care under Shared Lives schemes which provides a standard relief instead of deductions for their actual expenses, allowing them to keep simpler records. Shared Lives care can be paid for in many ways and one method is self-funded payments. This is where the person receiving Shared Lives care uses their own finances to meet their support costs. This measure expands the scope of qualifying care relief to cover payments made from individuals that self-fund care they receive through a Shared Lives scheme.
Policy objective
This measure will ensure that carers who are currently excluded from qualifying care relief because the person they look after happens to self-fund their care, are able to use this simplification scheme, in the same way as carers who look after people whose care is funded by, for example a local authority. Self-funded payments are a new way of funding Shared Lives care that did not exist when the legislation was created and the number of these types of payments is increasing. This measure supports Shared Lives care, which is in line with government objectives. To prevent abuse, the person funding the care does not pay the carer directly but pays them through an approved Shared Lives scheme. As the payment is always made through a Shared Lives scheme it ensures fairness as to who can claim the relief.
Background to the measure
This measure was announced at Autumn Budget 2017.
Detailed proposal
Operative date
The measure will have effect from the tax year 2017 to 2018.
Current law
Current law on qualifying care relief is included in the Income Tax (Trading and Other Income) Act 2005 Sections 803 to 828. Shared Lives care is one of the care arrangements covered by this relief and its definition and the conditions for a Shared Lives payment to qualify are listed in section 806A. Qualifying care relief (specified social care schemes) Order 2011 (SI 2011/712) further specifies the conditions a Shared Lives scheme must meet for it to be eligible for qualifying care relief. This includes the condition that the carer must receive the payment from the local authority.
Proposed revisions
Legislation will be introduced by statutory instrument to amend qualifying care relief (specified social care schemes) Order 2011 (SI 2011/712) to allow payments made by the care recipient through the Shared Lives scheme to qualify for the relief.
Summary of impacts
Exchequer impact (£m)
| 2017 to 2018 | 2018 to 2019 | 2019 to 2020 | 2020 to 2021 | 2021 to 2022 | 2022 to 2023 |
|---|---|---|---|---|---|
| negligible | negligible | negligible | negligible | negligible | negligible |
This measure is expected to have a negligible impact on the Exchequer.
Economic impact
This measure is not expected to have any significant economic impacts.
Impact on individuals, households and families
This measure will make the simplification scheme available to up to 170 Shared Lives carers initially. The measure will ensure that qualifying care relief is updated to reflect current developments in the care sector, including self-funded payments.
The measure is not expected to impact on family formation, stability or breakdown.
Equalities impacts
This measure will make the simplification scheme available to Shared Lives carers of people who receive care through a Shared Lives scheme and who self-fund their care.
Impact on business including civil society organisations
This measure will have no impact on businesses or civil society organisations. It will make the simplification scheme available to Shared Lives carers of people who receive care through a Shared Lives scheme and who self-fund their care.
Operational impact (£m) (HMRC or other)
No operational impact expected. Only a small update to guidance will be required.
Other impacts
Other impacts have been considered and none have been identified.
Monitoring and evaluation
HM Revenue and Customs (HMRC) will continue to keep this policy under review.
Further advice
If you have any questions about this change, please contact Sean Rath on telephone: 03000 591 076 or email: sean.rath@hmrc.gsi.gov.uk