Shared Lives Payments
I hope I have added this to the correct topic area. I am supporting an individual who is considering becoming a Shared Lives Carer for someone who they previously fostered, as the young person will be turning 18, and they have asked questions about the income from Shared Lives and the way that the DWP/HMRC treat this.
They are in receipt of Carers Allowance and Child Tax Credits, what we are trying to find out is, will the payments from Shared Lives for ‘Care and Support’ be taken into account as income by the DWP/HMRC and their Child Tax Credits and Carers Allowance then impacted? I have found information that states that DWP will disregard payments for care and support, - see Adult Placement/Shared Lives schemes 85234 / 85235 / 85236 on the link below
but on the Shared Lives Website it states that the Carer will become self-employed, which would suggest they would need to report all income to HMRC.
There is also information that there is no DWP regulations around the Carers Allowance and Shared Lives Payments and that this decision would be made by a Decision Maker within the DWP - See Page 4 2b on link below.
Thanks you for your time and assistance on this matter.
For tax credits, there is an income disregard for ‘qualifying care receipts’ which are exempt from tax on up to £10,000 a year plus £250 a week per adult. See HMRC guidance: https://www.gov.uk/hmrc-internal-manuals/tax-credits-technical-manual/tctm04908 & https://www.gov.uk/government/publications/qualifying-care-relief-foster-carers-adult-placement-carers-kinship-carers-and-staying-put-carers-hs236-self-assessment-helpsheet/hs236-qualifying-care-relief-foster-carers-adult-placement-carers-kinship-carers-and-staying-put-carers-2018
This originally referred to foster care but was amended in 2011 to include Shared Lives placements. https://www.legislation.gov.uk/uksi/2011/721/contents/made
Mark has already covered the tax credit treatment. They may be entitled to WTC as the hours count as remunerative work.
My understanding from speaking to some Shared Lives organisations is that the UC rules are different. Whereas tax credits deal with foster carers and shared lives carers in the same way, it seems that UC does not which means that shared lives carers are treated as any other self-employed person in UC. We haven’t looked into the detail of this, but i’m flagging it as it is worth checking so that your client understands what might happen in the future.
We have some more detailed info on the tax position on the LITRG website: https://www.litrg.org.uk/tax-guides/disabled-people-and-carers/caring-someone/foster-carers-and-shared-lives-carers
Also important to understand that shared lives carers and staying out carers in theory receive two separate income streams: a fee for providing care which probably does have the nature of self-employed earnings for means tested benefit purposes; and a payment for accommodation and sometimes board from the client. This is something of a fiction but it is necessary to enable the client/carer to claim a UC housing element (or HB in the old days). In practice neither the carer nor the client is likely to be actively conscious of this, it’s just a way of getting part of the cost met through HB/UC for the client’s accommodation.
In the old says, HB and social workers used to organise it all among themselves, they just put a piece of paper in front of the client and carer and said “here, sign this, don’t worry about it”. In UC the client (or his/her representatives) will need to be more aware of this split between rent and care fees because they need to manage the housing element part of the UC claim themselves. As far as the carer is concerned, if the carer is on UC any payment for accommodation and board from a commercial lodger is completely ignored as income so only the care fee (net of expenses) should affect UC as s/e earnings.
Finally, for the avoidance of doubt, the client’s rent is covered by UC because the landlord is a private individual so it does not satisfy the definition of “specified accommodation”. You sometimes find an elaborate arrangement in which a non-profit body is interposed between client and carer in order to make it specified accommodation - eg in one local authority area the local YMCA rents the room from the householder and then sublets it to a vulnerable care leaver ... the very same care leaver who has been living there for years as a foster child. But in a conventional set-up, the tenancy/licence agreement is between the client and the carer directly and housing costs need to be claimed through UC.
I have written a post about Shared Lives and Carers Allowance today:
Dont suppose you found out anything further with the Carers Allowance side of things did you?