Increase to Shared Lives tax break announced in #Budget2023

For many years the qualifying amount for QCR has been

• A fixed amount for each household of up to £10,000 a year; and
• £250.00 per person per week (for up to three* people)

In yesterday’s budget, the government announced that the new amount would be

• A fixed amount for each household of up to £18,140 a year; and
• £450.00 per person per week (for up to three* people)

The government has also committed to increasing the QCR threshold every year, in line with the CPI (consumer price index). This is welcome news as Shared Lives carers have been particularly affected by the cost of living crises and high levels of inflation.

Although Qualifying Care Relief hasn’t changed for many years, most Shared Lives carers earn less than the current qualifying amount – meaning they don’t have to pay any tax on their Shared Lives earnings.

However, carers who support people with very complex needs can earn significantly more money, and for these carers, this increase could be worth as much as £8,000 a year, or more.

Once the new threshold comes into effect, Shared Lives carers supporting one person could earn up to £41,540 a year before having to pay Income Tax or Class 4 National Insurance contributions on their Shared Lives income.

Shared Lives households supporting three* people could earn up to £88,340 a year tax free.

These ambitious thresholds indicate that government recognises that being a Shared Lives carer should not just be personally rewarding, but financially rewarding too. However, figures collected in our #Invaluable campaign show that, for many carers, there is still a gap between that ambition and reality.

Across the UK, the average lowest banding for care and support fees is a little more than £300 per week per person. The average highest banding is around £500 per person per week for people with high assessed care needs.

Shared Lives Plus are committed to working with Shared Lives schemes, and local and national governments, to make sure that care and support fees properly reflect the value of the work done by Shared Lives carers. And we are encouraged that the work we have been doing to raise the profile of Shared Lives carers among MPs, ministers, and senior civil servants is starting to make a real impact.

We are hopeful that, in the future, more Shared Lives carers are able to take advantage of the full amount of tax relief available through Qualifying Care Relief.

Example 1 – full financial year:

Susan is a Shared Lives carer for Tony and Mike. Her Shared Lives income for the financial year is £33,800.

Since Tony and Mike have lived with her for the full financial year, Susan’s qualifying amount would be:

Fixed amount: £18,140 + weekly amount: £46,800 (£450 x 2 x 52) = qualifying amount: £69,940

Since Susan’s Shared Lives income (£33,800) is less than her qualifying amount (£69,940), she would not have to make any NIC Class 4 contributions, or pay any tax on her Shared Lives income.

Example 2 – partial financial year:

If Tony and Mike had only been living with Susan for 6 months, her Shared Lives income for the year would be £16,9000, and the figures for Qualifying Care Relief would look like this:

Fixed amount: £9,070 (50% of the full fixed amount) + weekly amount: £23,400 (£450 x 2 x 26) = qualifying amount: £32,470

Susan’s Shared Lives income (£16,900) is still less than her qualifying amount (£32,470), so she would still not have to make any NIC Class 4 contributions, or to pay any tax on her Shared Lives income.

We will be updating our website and guidance documents in the coming days to reflect these changes.

* In England, Wales, and Northern Ireland a Shared Lives household can support a maximum of three people at any time.

In Scotland a Shared Lives household can support a maximum of two adults – unless the Shared Lives carers are dual registered as foster carers and providing support to a maximum of three young adults.