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HMRC internal manual

Business Income Manual

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Care providers: qualifying care relief: shared lives care

S804A, S806A Income Tax (Trading and Other Income) Act 2005, Qualifying Care Relief (Specified Social Care Schemes) Order 2011, SI 2011/712

Shared lives carer schemes were formerly known as ‘adult placement schemes’. Such schemes started in the early 1970s and grew rapidly in the 1990s as a result of the Government’s care in the community programme. The schemes are usually run by local authorities and offer not only long term caring but also short term and respite caring.

Typically, a full time carer will be paid weekly by the local authority from a mixture of allowances and housing benefit to which their resident is entitled, or a residential care allowance. In addition, the local authority may add a small top-up payment. The level of payment to carers varies greatly between local authorities. It can also vary within individual local authorities’ schemes where the level of payment may depend upon the degree of vulnerability and support needed.

For the purpose of qualifying care relief, shared lives care is provided if an individual provides accommodation and care for an adult or child who has been placed with them and the following conditions are satisfied:

  • the accommodation is the carer’s own home;
  • the accommodation and care are provided on the basis that the adult or child will share the carer’s home and daily family life during the placement;
  • the placement is made under a specified social care scheme (see below);
  • the carer does not provide the accommodation and care as a foster carer.

Supported lodging schemes, in which the relationship is more akin to that of a landlord and tenant rather than that between family members, do not qualify for qualifying care relief. Providers of supported lodging schemes may choose to use ‘rent a room relief’ (please refer to the guidance at PIM4000 onwards).

Placement cap

Qualifying care relief in respect of shared lives care is limited to those providing care for up to a maximum of three placements at any given time during the tax year (the ‘placement cap’). However, a group of siblings placed together in the same household only counts as one shared lives placement. If the placement cap is exceeded but the carer is also a foster carer, qualifying care relief applies to the foster care only. Otherwise, the carer should calculate their profits using the normal rules applying to trade profits or miscellaneous income.

Specified social care schemes

The social care schemes specified to which qualifying care relief applies fall within four categories.

Adult placement care

Adult placement care can include full time care, day care and respite care. The carer is eligible for qualifying care relief if he or she is:

  • in England, an adult placement carer within the meaning of the Health and Social Care Act 2008 (Regulated Activities) Regulations 2010;
  • in Wales, an adult placement carer within the meaning of the Adult Placement Schemes (Wales) Regulations 2004;
  • in Scotland, a person with whom the cared-for person has been accommodated within the meaning of S47(1)(j) Public Services Reform (Scotland) Act 2010, or
  • in Northern Ireland, an adult placement carer within the meaning of the Adult Placement Agencies Regulations (Northern Ireland) 2007.

Kinship care

Qualifying care relief is available to a carer providing kinship care to a child that is under 18 years of age and is a looked after child, provided that the carer:

  • is related to the child either by blood, marriage or civil partnership, but is not a parent or step-parent, or is known to the child and has a pre-existing relationship with him or her,
  • is regarded by the relevant local authority or health service body to be a suitable person to care for the child, and
  • is not a person in respect of whom a court has made a residence order or a special guardianship order in respect of the child [or who is named in a child arrangements order as person with whom the child is to live] (a ‘qualifying guardian’).

Guidance on the tax rules applying to qualifying guardians is at BIM52815.

Staying put care

Staying put care refers to an arrangement whereby a previously looked after child continues to be cared for. An individual providing care to a young person under a staying put arrangement is eligible for qualifying care relief. This applies where the young person:

  • has reached the age of 18 but is under 21, or is in further education, in higher education or is pursuing full time vocational training,
  • immediately prior to reaching 18 years, was a looked after child, and
  • has a pathway plan.

In Scotland, the first condition is also met if the young person is over school age but under 19 and was, at the time of ceasing to be of school age, a looked after child.

Parent and child arrangements

Local authorities may make arrangements for a parent and child to live with a carer. Qualifying care relief applies where:

  • a local authority or health service body has arranged for the parent and child to live with the carer,
  • the carer provides care for the parent and child, and
  • the carer receives payment from the local authority for providing that care.