The measure

A tax free allowance per household will be available to shared lives carers who look after up to three people. It cannot be set against the carer's income from other sources. The allowance is divided equally between carers if there is more than one qualifying carer in the household. The tax free allowance is

• £10,000 fixed amount per tax year;
• £200 per week (or part week), per placement aged under 11; and
• £250 per week (or part week), per placement aged 11 or over.

Where a carer's income exceeds the tax free allowance the carer can be taxed on either:

• The excess over the tax free amount; or
• The total income less allowable expenses calculated under normal business tax rules.

In addition to the new relief for shared lives carers some people may also qualify for foster care relief. The number of children they foster will not be included in calculating the number of placements the carer has.

Where that is the case only one £10,000 fixed amount can be claimed. However, the foster care relief and shared lives relief is aggregated to set against income from those sources.

Any income over the aggregated amount is assessed using either the current simplified arrangement or under the normal business practice mentioned above.

Who will be affected?

Shared lives carers (including those under the Adult Placement Scheme, Staying Put Carers and individuals receiving a Scottish Kinship Care Allowance), who provide accommodation in their own home for up to three people who have been placed with them under a local authority Shared Lives Placement Scheme.

When?

The measure will take effect from 6 April 2010.