Foster child approaching 18 will be transferred to supported lodgings arrangement with same carer, arranged by Barnados on behalf of LA. Supported lodgings provider gets CTC for own children. License agreement between provider and young person says that rent of £64 is due plus £20.50 for meals, total £84.50 (nothing said about utilities). YP will claim HB and ask for it to be paid to Barnados, who will then pass it plus £80 Supporting People money to provider. YP will claim IS as in relevant education and estranged, and pay for meals from this.

With regard to the provider's Tax Credits, so far as I can see they can claim Rent a Room relief on the £84.50 so it will not be taken as taxable income and therefore not affect their CTC. However, will the £80 Supporting People money be treated as taxable income and therefore reduce their CTC?

Just found some HMRC guidance and hence answered my own question. Supporting People payments are disregarded as taxable income and do not affect Tax Credits.