Income Tax and Corporation Tax exemption of payments made to sponsors
Published 20 July 2022
© Crown copyright 2022
This publication is licensed under the terms of the Open Government Licence v3.0 except where otherwise stated. To view this licence, visit nationalarchives.gov.uk/doc/open-government-licence/version/3 or write to the Information Policy Team, The National Archives, Kew, London TW9 4DU, or email: psi@nationalarchives.gov.uk.
Where we have identified any third party copyright information you will need to obtain permission from the copyright holders concerned.
This publication is available at https://www.gov.uk/government/publications/homes-for-ukraine-sponsorship-scheme-tax-exemptions-and-reliefs/income-tax-and-corporation-tax-exemption-of-payments-made-to-sponsors
Who is likely to be affected
Individuals, communities, the voluntary sector, and organisations, such as businesses, charities and religious groups, that receive ‘thank you’ payments under the Homes for Ukraine scheme.
General description of the measure
This measure introduces an exemption from Income Tax and Corporation Tax for ‘thank you’ payments made by local authorities to sponsors under the Homes for Ukraine scheme.
Policy objective
The objective of this measure is to confirm that ‘thank you’ payments, made by local authorities to sponsors under the Homes for Ukraine Scheme, are exempt from Income Tax and Corporation Tax.
Background to the measure
In March 2022 the government announced the Homes for Ukraine scheme, a humanitarian sponsorship visa scheme allowing individuals, charities, community groups and businesses in the UK to sponsor Ukrainians arriving in the UK.
As part of this scheme sponsors receive a monthly sum of £350 (capped to 12 months) as a thank you for housing an individual or family. Without specific legislation these ‘thank you’ payments could be subject to tax.
In a Written Ministerial Statement on 31 March 2022, the government confirmed that legislation would be introduced in Finance Bill 2022-23 to exempt the payments from Income Tax and Corporation Tax.
Detailed proposal
Operative date
This measure is wholly relieving with retrospective effect. The exemption from Income Tax and Corporation Tax will have effect from the 14 March 2022, when the Homes for Ukraine scheme launched.
Current law
The ‘thank you’ payments made to individuals or unincorporated entities under the Homes for Ukraine scheme could be subject to Income Tax under Chapters 2 and 3, Part 3 Income Tax (Trading and Other Income) Act 2005 or, Chapter 8, Part 5 Income Tax (Trading and Other Income) Act 2005.
Payments made to incorporated businesses could be subject to Corporation Tax under Chapter 2, Part 2 Corporation Tax Act 2009, Chapter 3, Part 4 Corporation Tax Act 2009 or Chapter 8, Part 10 Corporation Tax Act 2009.
Proposed revisions
Legislation will be introduced in Finance Bill 2022-23 to exempt the ‘thank you’ payments made by local authorities to sponsors under the Homes for Ukraine scheme from Income Tax and Corporation Tax.
Summary of impacts
Exchequer impact (£million)
| 2022 to 2023 | 2023 to 2024 | 2024 to 2025 | 2025 to 2026 | 2026 to 2027 | 2027 to 2028 |
|---|---|---|---|---|---|
| Empty | Empty | Empty | Empty | Empty | Empty |
The final costing will be subject to scrutiny by the Office for Budget Responsibility, and will be set out at the next fiscal event.
Economic impact
This measure is not expected to have any significant macroeconomic impacts.
Impact on individuals, households and families
This measure is expected to have a positive impact on individuals receiving the ‘thank you’ payments under the Homes for Ukraine scheme. This measure will ensure they do not pay Income Tax on those payments.
Customer experience is expected to remain broadly the same as this measure does not alter how individuals interact with HMRC.
The measure is not expected to impact on family formation, stability or breakdown.
Equalities impacts
This measure will have a positive impact, reflecting the population receiving the ‘thank you’ payments tax-free.
Impact on business including civil society organisations
This measure is expected to have a positive impact on businesses receiving the ‘thank you’ payments under the Homes for Ukraine scheme. This measure will make sure they do not pay Income Tax or Corporation Tax on those payments. One-off costs could include familiarisation with this change. There are not expected to be any continuing costs.
This measure is expected to have a positive impact on civil society organisations that receive the ‘thank you’ payment under the Homes for Ukraine scheme. This measure will make sure they do not pay Income Tax or Corporation Tax on those payments. One-off costs could include familiarisation with this change. There are not expected to be any continuing costs.
Customer experience is expected to remain broadly the same as it does not alter how businesses interact with HMRC.
Operational impact (£million) (HMRC or other)
There are no operational impacts to HMRC of implementing this measure.
Other impacts
Other impacts have been considered and none have been identified.
Monitoring and evaluation
The measure will be kept under review through regular communication with the Department for Levelling Up Housing and Communities.
Further advice
If you have any questions about this change, email: incometaxstructuremailbox@hmrc.gov.uk.